[1948] 2 W.W.R. 754, 56 Man. R. 295, [1948] 4 D.L.R. 419, 1948
CarswellMan 53
Hole Estate, Re
In re Hole Estate
Manitoba King's Bench
Dysart, J.
Judgment: July 17, 1948
Counsel: H. P. Grundy, K.C. , for trustees.
J. S. Lamont, K.C. , and John Allen, K.C. , for province of Manitoba.
L. St. G. Stubbs and H. St. G. Stubbs , for province of Saskatchewan.
Subject: Estates and Trusts; Property; Contracts
Estates --- Intestate succession -- Escheats and bona vacantia.
Sale of Land --- Completion of contract -- Rights and duties pending
completion -- Right of vendor to lien.
Whether Manitoba or Saskatchewan Entitled to the Bona Vacantia.
Effect of Where Vendor's Interests Become Bona Vacantia.
An intestate domiciled in Manitoba died therein without leaving any
heirs or next-of-kin. One of the assets of her estate was her interest
as vendor in an agreement for the sale of land in Saskatchewan. The
vendor's duplicate of the agreement was kept in Winnipeg and was there
at her death. The agreement was executed by both parties under seal.
The purchase-moneys were paid up in full after the intestate's death.
Her interest as vendor was claimed by both Manitoba and Saskatchewan.
Held:
Upon her death all her assets, including her rights under the sale
agreement, became bona vacantia and, as such, immediately became the
property of His Majesty the King in the right of the province of
Manitoba.
The province of Manitoba was not, however, obliged to discharge the
liabilities of the estate, some of which were debts incurred by the
intestate and the remainder were incurred by the administrator in
searching for heirs and managing the estate, since, although the crown
took the assets the debts were not in any way secured by or attached
to them; the intestate's death separated her assets from her
liabilities, and the crown was under no obligation to take over her
liabilities.
In reaching the above conclusions the court held :
(1) The distingui****ng feature of bona vacantia is that, apart from
the doctrine, it is property without an owner, not that the owner
cannot be found as in the case of lost or abandoned property; and the
doctrine is founded upon the common-law theory that all property must
be in the owner****p of some one at all times without interruption. The
crown does not claim by succession at all, but because there is no
succession; the principle being that the right to take that which
belongs to no one appertains to the crown as jura regalia: In re
Barnett's Trust, [1902] 1 Ch. 847, 71 LJ Ch 408 .
(2) The sovereign takes title to bona vacantia , not in his personal
but in his official capacity, i.e., he holds the property for those of
his subjects in whose constitutional domain the property is legally
located at the time it vests in him: Rex ex rel Atty.-Gen. for Can. v.
Atty.-Gen. for B.C., [1922] 3 W.W.R. 269 (S.C.C.) , affirmed [1923] 3
WWR 1252 (P.C.), 11 Can Abr 456; In re Wudwud, Malesko and Stevenson
Esates; Atty.-Gen for Can. v. Atty.-Gen. for Alta., [1928] 3 W.W.R. 97
(P.C.) , 11 Can Abr 455.
(3) The title which the crown thus takes comes therefore neither from
nor through the last previous owner but completely apart from and
independently of him. Because succession is not involved, all cases
and statutes dealing with wills or devolution or distribution of
property are of no direct assistance.
(4) The starting point of the inquiry must therefore be the written
agreement itself, the otherwise "ownerless" thing found in Manitoba,
which as evidence of the vendor's rights was the sole bone of
contention. The land itself was not the object of any express claim.
(5) Since the written agreement itself is within the jurisdiction of
the Manitoba court the objection to the jurisdiction of that court to
decide the issues in question cannot be upheld.
(6) The division of property into movable and immovable is not part of
the ordinary law either of Manitoba or Saskatchewan; in both provinces
the division is into real and personal property. The division into
movable and immovable is only called into operation here when the
provincial courts have to determine rights between persons domiciled
in the province and persons domiciled in countries which do not adopt
our division into real and personal property.
(7) This case falls to be decided according to the common-law division
of realty or personalty. But even if the civil-law division were
followed, it could not change the nature of the vendor's rights so as
to make them interests in land (whether called realty or immovables)
when they are in law only interests in money (whether called
personalty or movables). The result must be the same under either
division.
(8) The law which defines and governs a vendor's rights under a sale
agreement, such as the one in question here, is the same in
Saskatchewan as in Manitoba.
(9) The remedies which have been invented and applied for breaches of
the rights of a vendor under an agreement for the sale of land, or for
enforcing them, must be the test and measure of those rights.
Rescission of the agreement for the sale of land is not a remedy under
the agreement itself; it is a new and independent contract made by the
vendor and purchaser to terminate their existing contract; and the
estate or interest in the land acquired by the vendor through
rescission cannot be said to have been derived under or by virtue of
the sale agreement.
(10) With respect to a vendor's equitable lien it is clear: (1) The
lien, is not, in any sense, a term or condition of the agreement for
sale; (2) It does not arise out of the agreement; (3) It is implied by
the principles of equity; (4) It has no existence unless and until a
court of equity creates it; (5) No court can create it unless and
until the vendor applies for it; (6) No vendor has a right to apply
for it unless and until his purchaser is in default; (7) The court,
even in the case of a purchaser's default, may properly refuse to
create the lien; (8) The court will not in any case create the lien,
unless (a ) the vendor has no other sufficient security, or (b ) all
the equities between the parties warrant or justify the creation.
(11) The purchaser does not get by virtue of the sale agreement a
legal estate but an equitable estate commensurate with the estate
which the vendor owned and agreed to sell to him, and which equity
will give him by way of a decree for specific performance: Miller v.
Howard (1915) 7 WWR 627 (P.C.), 32 Can Abr 655.
(12) Weidman v. McClary Mfg. Co., [1917] 2 W.W.R. 210 (Sask.) , 19 Can
Abr 83, 242, and those cases that followed it, show that, at least
after payment in full and before transfer is issued, the vendor of
land holds the legal title as bare trustee for the purchaser. If the
vendor had any "beneficial interest" in the land while any part of the
purchase-price remained unpaid that interest ceased with the debt. In
other words, the interest was in the money receivable.
(13) The decision in In re Trustee Act; In re Burke Estate, [1927] 3
W.W.R. 718 (Sask.) , 10 Can Abr 964, seems to be contrary to the
principles of law as laid down in the cases cited herein, and they are
applicable to Saskatchewan as well as to Manitoba.
(14) In Saskatchewan as well as in Manitoba the vendor's rights under
the agreement for sale here in question were only personalty -- rights
to the purchase-money. When, therefore, those moneys were paid in full
after the vendor's death, the vendor was, by relation back to the date
of the agreement, and from that date, only a bare trustee of the legal
title for the purchaser, and so had no interest in the land.
(15) The remedies available to vendor for breach of his contractual
rights under the sale agreement show that after entering into the
agreement he has no further beneficial right in the land itself.
(16) The foregoing principles of equity apply to all contracts for the
sale and purchase of land, whether the land is under the old system of
registry or under the new, or Torrens, system. See In re Church,
[1923] 3 W.W.R. 405, (sub nom. Church v. Hill) [1923] S.C.R. 652, 32
Can Abr 713 .
(17) The debt was located in Manitoba. The purchase-money was payable
there by virtue of the contract. This fact is a strong feature of its
location. But whether or not that fact is decisive, the agreement,
being under seal, was a specialty, and, consequently, the specialty
debt was located in Manitoba. A debt is "conspicuous" where it can be
effectually dealt with and has its location there. Even if the unpaid
vendor was in a position similar to that of a mortgagee, as Haultain,
C.J.S. seems to say in his dictum in the Weidman-McClary case, supra ,
the location of the debt would not be where the security lay, but
where the specialty was found at the death.
Dysart, J. :
1 The late Jane Hole, a widow, died on January 9, 1944, at the
city of Winnipeg, in Manitoba, where she had long had her residence
and domicile. She left considerable property, but no will; and an
exhaustive search conducted by the Toronto General Trusts Cor****ation,
as administrator of her estate, has already satisfied this court that
Mrs. Hole left surviving her no heirs or next-of-kin.
2 One of her assets was her interest as vendor in an agreement for
the sale of farm land situate in the province of Saskatchewan. This
land was registered in the land titles office in the name of Thomas
Edward Chester, who held it as trustee for Mrs. Hole; and the
agreement for sale was executed by Mr. Chester as vendor. The vendor's
duplicate of this agreement, as well as all the other physical assets
of the intestate, was kept in the city of Winnipeg, and was here at
the time of the death.
3 The crown claims that on the death of Mrs. Hole, intestate and
heirless, all her property became bona vacantia , and, as such,
immediately vested in His Majesty the King. This claim is not
disputed.
4 The intestate's interest as vendor under the agreement for sale
is claimed by both the province of Manitoba and the province of
Saskatchewan -- each asserting owner****p in the name of His Majesty.
All the remaining property is claimed in the same right by Manitoba
alone.
5 In these cir***stances, the administrator has moved, by
originating notice under K.B. Rule 534, for directions "respecting the
management or administration of the trust property or the assets of or
connected with the estate;" and has submitted four questions, three of
which may be combined into one, thus: Does His Majesty the King take
the whole or any part -- and, if the latter, what part -- of these
assets in the right of (a ) the Dominion of Canada; or (b ) the
province of Manitoba; or (c ) the province of Saskatchewan? The fourth
question is:
In what manner should the debts of the intestate, and the costs and
disbursements of the administrator, be allocated and deducted as
between the parties who may be found to be entitled to the assets or
any part of them?
6 On the return of this motion, the Dominion did not appear, but
the two provinces did appear and press their respective claims along
the lines already indicated.
7 It is common ground that the claims are not affected by the
trustee****p. The purchase-moneys -- nearly $6,000 -- owing under the
agreement at the time of the intestate's death have since then been
paid in full by the purchaser in exchange for a transfer of the land,
and are now held in trust for the claimant who is entitled to the
vendor's interest under the sale agreement.
8 Notwithstanding that counsel for both provinces agree that all
these assets are bona vacantia , it seems necessary at the outset to
state briefly the law relating to bona vacantia , especially in so far
as that law affects the nature of the title which the crown takes in
them.
'Bona vacantia ' is the name given to property to which no one can
make a good claim, and is said to be vested by law in the Crown to
avoid the strife and contention to which a title arising from mere
occupancy might give rise. The distingui****ng feature of the property
is that it is ownerless, i.e., it has no owner, and not that the owner
cannot be found as in the case of lost or abandoned property: In re
Musurus Estate, [1936] 2 All E.R. 1666 (editor's note); In re
Barnett's Trust, [1902] 1 Ch. 847, 71 LJ Ch 408 ; 6 Halsbury , 2nd
ed., pp. 827-8; 11 E. & E. Dig., p. 587.
9 The doctrine of bona vacantia is founded upon the common-law
theory that all property must be in the owner****p of some one at all
times without interruption: Graysbrook v. Fox (1565) 1 Plowden 275, 75
ER 419, at 427-8. Under that theory, when the owner of the property
dies leaving no one who can rightfully claim it by devise, bequest,
inheritance, or otherwise, the property must instantly vest in some
stranger to it; and, by long-established law, the reigning sovereign
is the person in whom it should and does so vest.
The Crown does not claim it by succession at all, but because there is
no succession. ... the principle was that the right to take that which
belonged to no one appertained to the Crown as jura regalia : Per
Kekewich, J., at p. 857 of In re Barnett's Trust, supra .
10 The sovereign, however, takes not in his personal, but in his
official, capacity -- that is, he holds the property for those of his
subjects in whose constitutional domain the property is legally
located at the time of the vesting: Rex ex rel Atty.-Gen. for Can. v.
Atty.-Gen. for B.C., [1922] 3 W.W.R. 269, 63 S.C.R. 622 , affirmed by
the Privy Council, [1923] 3 WWR 1252, [1924] AC 213, 93 LJPC 76; In re
Wudwud, Malesko and Stevenson Estates; Atty.-Gen. for Can. v. Atty.-
Gen. for Alta., [1928] 3 W.W.R. 97, [1928] A.C. 475, 97 L.J.P.C. 106 .
11 The title which the crown thus takes comes therefore neither
from nor through the last previous owner, but completely apart from
and independent of that owner. And because succession is not involved,
all cases and statutes dealing with wills, with devolution, and with
distribution of property, are of no direct assistance to us.
12 The starting point of our inquiry must be the agreement itself
-- the do***ent -- the otherwise ownerless "thing" that has been found
here in Manitoba. This do***ent, as evidence of the vendor's rights,
is the sole bone of contention. The land itself is not the object of
any express claim.
13 At the outset of the argument, Mr. Stubbs, counsel for
Saskatchewan, objected to the jurisdiction of this court to try the
issues raised here. I overruled the objection on the ground that the
written agreement for sale, upon which Saskatchewan's claim is based,
is within the jurisdiction of this court and is properly brought
before this court for the determination of its owner****p.
14 Proceeding then to state Saskatchewan's claims, Mr. Stubbs
submitted that our first inquiry must be (1) "as to the nature of the
interest left by the deceased" in the Saskatchewan land; (2) that the
question is "not whether that interest was real or personal property,
but whether it was a movable or immovable;" and (3) assuming that it
was or is an immovable, that the interest is governed by the laws of
Saskatchewan and devolves or escheats according to that law.
15 For Manitoba, Mr. Lamont, ably assisted by Mr. Allen, submitted
(1) that, by the agreement for sale, the vendor's prior estate or
interest in the Saskatchewan land "became personalty, and was no
longer realty;" (2) that as personalty, it is located in Manitoba
because under the contract it was payable here; and (3) that, in any
event, the debt was a specialty debt and as such was located here
where the specialty was found.
16 The rights created or evidenced by agreements for sale vary
according to the terms of each agreement. An "open contract" for the
sale and purchase of land establishes rights which are well settled,
but those general rights are often varied by special terms and
provisions introduced into formal agreements.
17 The sale agreement here in question was made in duplicate at
Winnipeg on September 15, 1937, and was executed under seal by both
contracting parties. It contains the usual reciprocal provisions for
the sale and purchase of the land described therein. The price --
$6,000 -- is made payable to the vendor at Winnipeg in 12 annual
instalments, with interest; and the purchaser covenants to pay that
sum according to the terms prescribed. The vendor on his part
covenants that, on payment of all sums payable under the agreement, he
will transfer the land to the purchaser.
18 Several other provisions not unusual in contracts of this sort
are contained in this agreement. Some of these provisions are designed
to preserve the farm land in good tillable condition, and to maintain
the buildings intact and insured. By an attornment clause, the
purchaser agrees to "hold the said land as tenant to the vendor at a
yearly rental equivalent [to] and applicable in satisfaction of the
yearly payments here provided to be made;" such yearly rental to
"become due and payable" as soon as "the crop or any ****tion thereof
has been severed from the land." Another provision reads: "The
purchaser shall have the right to possession of the said land
forthwith;" and still another reads that "he will pay all taxes levied
against the said land" after the date of the said sale agreement. One
provision of special significance is as follows:
Notwithstanding anything herein contained, these Presents shall for
all purposes be construed according to the laws of the Province of
Saskatchewan and any cause of action arising hereunder or by virtue
hereof shall be deemed to have arisen ... in the said Province.
19 Conspicuous by its absence is any provision for the cancelling,
or the rescinding, or the terminating of the agreement upon default by
the purchaser in the performance of his covenants thereunder.
20 The simplest way of determining what rights were created for
the vendor by this sale agreement is to examine the remedies available
for the breach of those rights or for enforcing them. Ubi jus ibi
remedium -- where there is a right there is a remedy. Expounding this
legal maxim, Broom , 9th ed., p. 131, says:
.... whenever the common law gives a right or prohibits an injury, it
also gives a remedy: Lex semper dabit remedium . If a man has a right,
he must ... 'have a means to vindicate and maintain it, and a remedy
if he is injured in the exercise and enjoyment of it; and, indeed, it
is a vain thing to imagine a right without a remedy, for want of a
right and want of a remedy are reciprocal'.
21 The same principle applies with equal force to equitable
rights.
22 The remedies, therefore, which down the ages have been invented
and applied for breaches of the vendor's rights, or for enforcing
them, must be accepted as the test and measure of those rights. A
vendor's remedies for his purchaser's failure to pay the purchase-
price are (1) in law, an action for damages for the breach of the
contract; and (2) in equity, a suit for specific performance. His
action for damages is, of course, an action for money -- not for any
interest in the land; his suit for specific performance is a
proceeding to compel the purchaser to pay the purchase-money. These
remedies may be adapted to take care of breaches of secondary as well
as primary obligations. Both the action at law and the suit in equity
predicate that the contract, although broken by the purchaser, still
continues in force as basis of the proceedings: Mayson v. Clouet,
[1924] 3 W.W.R. 211, [1924] A.C. 980, 93 L.J.P.C. 237 ; Morgan v. De
Geer, [1917] 3 W.W.R. 177, 10 Sask. L.R. 312 (en banc ). But if the
purchaser has broken the contract in a main feature, or if he has
repudiated or abandoned the contract, the vendor may, at his election,
treat the breach or repudiation or abandonment as in effect an offer
by the purchaser to rescind the contract. If the vendor accepts that
offer, he may ask a court of equity for a declaration that the
agreement has been cancelled or rescinded or terminated: Cornwall v.
Henson, [1900] 2 Ch. 298, 69 LJ Ch 581 . And if the equities of the
case warrant it, and the parties can be restored to their original
positions, a court of equity will declare rescission, by which it
returns to the vendor the land he has sold, and gives back to the
purchaser the money he has paid thereon unless he has agreed to
forfeit it. Any adjustments in the way of compensation for the use of
the land or otherwise are merely incidental. Clearly then, rescission
is not a remedy under the sale agreement itself; it is a new and
independent contract made by the vendor and purchaser to terminate
their existing contract; and the estate or interest in the land
acquired by the vendor through rescission cannot be said to have been
derived under or by virtue of the sale agreement.
23 The vendor's remedies for breach of the subsidiary or ancillary
provisions of the agreement in question are to the same effect; that
is, they can yield him no estate or interest in the land itself. Thus,
for breach of his right to have the land properly cultivated, the
vendor has a remedy for dam ages in money. The same is true of the
purchaser's covenant not to remove buildings. For failure to insure,
the remedy is provided in the agreement itself; namely, that the
vendor may effect insurance and add the premiums to the amount owing
under the contract. The attornment clause is in a different class; but
even this provision gives the vendor no right in the land -- it gives
only a right to distrain the crop when, after severance from the soil,
it has become personalty. The real purpose of the attornment clause is
not to create a tenancy, nor to declare the vendor to have the
owner****p of the land, but is only to facilitate the collection of the
purchase-money. This is recognized in Saskatchewan: Independent Lbr.
Co. v. David and Hurlbut (1911) 1 WWR 134, 5 Sask LR 1 (court en
banc ); Bloomaert v. Bloomaert and Dunlop (No. 3) [1927] 1 WWR 1014,
21 Sask LR 424.
24 The vendor has one other right, which is often called an
interest in the land sold, namely, a lien on the land for the unpaid
purchase-money. In its larger sense, the term "lien" might well be
construed as allied to a "charge" on the land. In that sense, if a
lien arises by virtue of the contract, e.g., as a mortgage, RSS, 1940,
ch. 98, sec. 2 (13), the vendor undoubtedly has an interest or estate
in the land sold. But no such lien is expressly, or even impliedly,
given to the vendor by the sale agreement now under consideration. The
only lien to which this vendor can possibly be entitled is that which
may be implied by a court of equity, and is called an "equitable
lien."
25 In 20 Halsrbury , 2nd ed., par. 714, it is said:
An equitable lien may be defined as an equitable right, conferred by
law upon one man, to charge the real or personal property of another,
until certain specific claims are satisfied.
It differs from an equitable charge insomuch as the latter is a right
founded on contract, whereas an equitable lien is founded on the
principle of equity, that he who has obtained possession of property
under a contract for payment of its value will not be allowed to keep
it without payment ....
26 And at par. 715:
A vendor of land has an equitable lien on the land sold for the whole
or part of the purchase-money until actual payment .... It is
immaterial to the lien whether the purchase-money is a sum gross ...
or is payable by instalments ....
27 And at par. 735:
A vendor's lien and other liens upon real estate are enforceable by
sale, but not until they have been established by a judgment of the
Court binding the persons affected by the lien.
28 In Williams on Vendor and Purchaser , 3rd ed., 1922, this lien
is discussed very extensively under two aspects, (1) where possession
of the land remains in the vendor until payment is made in full; and
(2) where possession is given to the purchaser before completion of
the contract. It is only with this latter aspect that we are here
concerned, because, as we have already noted, the purchaser was not
only given the right to immediate possession on the date of the sale
agreement, but seems to have gone into possession and to have remained
there. On this second aspect, Williams says, at pp. 499-500:
Where the purchaser is so let into possession before completion, the
vendor of course retains his legal estate in the property sold until
he parts with it by conveyance to the purchaser, but his only
beneficial interest in the property sold is his equitable lien for the
price, and in equity he holds his legal estate as security only for
payment of the purchase money.
29 To the same effect see Dart on Vendors and Purchasers , 8th
ed., pp. 605-615; McCaul on Remedies of Vendors and Purchasers , pp. 4
and 39-43, and the cases on which those text writers rely. See also
Sugden on Vendors and Purchasers , 14th ed., vol. 2, p. 375, and p.
376 note; 66 Corpus Juris , p. 1215, and Story on Equity
Jurisprudence , p. 530.
30 The courts of this province have had to deal with this lien. In
Bank of Montreal v. Condon (1896) 11 Man R 366, at 369, Taylor, C.J.,
collecting authorities, states:
A vendor's lien is not an interest in land. In Parke v. Riley (1866) 3
E & A 215, Mowat, V.C. said there was no room whatever for
controversy, that it is personal estate and not real estate. Upon the
death of a vendor unpaid purchase-money forms part of his personal
estate: Dart, V. & P. , (6th ed.) 293. In Perry on Trusts , sec. 238,
it is said, 'A vendor's lien is not an estate in land, nor is it a
charge on the land.' And in Overton on Liens , sec. 612, 'The vendor
has no estate in the land. His right is a mere possibility depending
upon the contingency of non-payment of the debt with the privilege of
establi****ng his equitable claim upon the land by a final decree of
the Court. It is indeed only a remedy for a debt, not a right of
property.'
31 And in Ronald v. Lillard (1915) 7 WWR 1128, 25 Man R 393,
Curran, J. held that a vendor's lien was not an estate or interest in
the land itself. At pp. 1130-31 he expounds the doctrine of the lien
as a mere creature of equity courts. His decision was affirmed on
appeal (25 Man R at 400).
32 The foregoing authorities, to which many more might be added,
clearly show: (1) That a vendor's equitable lien is not, in any sense,
a term or condition of the agreement for sale; (2) That it does not
arise out of the agreement; (3) That it is implied by the principles
of equity; (4) That it has no existence unless and until a court of
equity creates it; (5) That no court can create it unless and until
the vendor applies for it; (6) That no vendor has a right to apply for
it unless and until his purchaser is in default; (7) That the court,
even in the case of a purchaser's default, may properly refuse to
create the lien; (8) That the court will not in any case create the
lien, unless (a ) the vendor has no other sufficient security, or (b )
all the equities between the parties warrant or justify the creation.
33 In the present case the vendor did not apply -- in fact had no
real occasion to apply -- to the court for a declaration of an
equitable lien; therefore no such lien ever came into actual
existence.
34 The conclusion follows that the remedies available to the
vendor for breach of his contractual rights under the sale agreement
show that after entering into the agreement the vendor has no further
beneficial right in the land itself. This conclusion is
comprehensively stated in 29 Halsbury , 2nd. ed., par. 456:
An agreement for the sale of land, of which specific performance can
be ordered, operates as an alienation by the vendor of his beneficial
proprietary interest in the property. As from the date of the
contract, his beneficial interest is transferred from the land to the
purchase-money, and if his interest was of the nature of real estate,
it is, as from that date, converted into personalty. As regards the
land, he becomes, as between himself and the purchaser, constructively
a trustee for the purchaser ... and the purchaser becomes beneficial
owner, with the right to dispose of the property by sale, mortgage, or
otherwise, and to devise it by will ....
35 In Rayner v. Preston (1881) 18 Ch D 1, 50 LJ Ch 472, James,
L.J. states the relation****p of vendor and purchaser with even greater
clarity. At p. 13 he says:
I agree that it is not accurate to call the relation between the
vendor and purchaser of an estate under a contract while the contract
is in fieri the relation of trustee and cestui que trust . But that is
because it is uncertain whether the contract will or will not be
performed, and the character in which the parties stand to one another
remains in suspense as long as the contract is in fieri . But when the
contract is performed by actual conveyance, or performed in everything
but the mere formal act of sealing the engrossed deeds, then that
completion relates back to the contract, and it is thereby ascertained
that the relation was throughout that of trustee and cestui que
trust . That is to say, it is ascertained that while the legal estate
was in the vendor, the beneficial or equitable interest was wholly in
the purchaser. And that, in my opinion, is the correct definition of a
trust estate.
36 That statement was adopted as the law in Saskatchewan: See
Weidman v. McClary Mfg. Co., [1917] 2 W.W.R. 210 , at 222, 10 Sask LR
142, at 152.
37 The same result is reached by examining the rights which the
purchaser gets under the sale agreement. He gets, not a legal estate,
but an equitable estate commensurate with the estate which the vendor
owned and agreed to sell to him, and which equity will give him by way
of a decree for specific performance: Miller v. Howard, 7 W.W.R. 627,
[1915] A.C. 318, 84 L.J.P.C. 49 .
38 In this latter case, which originated in British Columbia, the
Judicial Committee states, at p. 631:
It is sometimes said that under a contract for the sale of an interest
in land the vendor becomes a trustee for the purchaser of the interest
contracted to be sold subject to a lien for the purchase money; but
however useful such a statement may be as illustrating a general
principle of equity, it is only true if and in so far as a court of
equity would, under all the cir***stances of the case, grant specific
performance of the contract.
The interest conferred by the agreement in question was an interest
commensurate with the relief which equity would give by way of
specific performance ....
39 The purchaser was there refused a decree for specific
performance, only because a third party had superior equities. In the
present case the purchaser would undoubtedly have had a right to
specific performance, because the vendor had a complete title to
convey; had agreed to sell all of it; and there were no intervening
equities to prevent a decree.
40 The foregoing principles of equity apply to all contracts for
the sale and purchase of land, whether the land is under the old
system of registry or under the new, or Torrens, system. The case of
In re Church, [1923] 3 W.W.R. 405, (sub nom. Church v. Hill) [1923]
S.C.R. 642 , is in point here. In that case a claim was made that the
corresponding Land Titles Act of Alberta excluded equitable estates in
land, but the claim was disallowed. Anglin, J. (later C.J.C.) says, at
p. 644:
The result of decisions of this court ... is that, notwithstanding
such provisions as s. 41 of ch. 24 of the Alberta statutes of 1906,
equitable doctrines and jurisdiction apply to lands under the Land
Titles or Torrens system of registration and equitable interests in
such lands may be created and will be recognized and protected.
41 And Mignault, J., at p. 647, states:
It is suggested that this recognition of an equitable interest
belonging to the purchaser under a sale agreement cannot be relied on
where there prevails a land titles system such as that in forcc in
Alberta. ... it does not appear possible, and certainly not inter
partes , to exclude from the Land Titles Act equitable interests in
property resulting from sale agreements. Equitable interests in
property subject to the Act were expressly recognized by this court in
Jellet v. Wilkie (1896) 26 SCR 282.
42 Thus far, the vendor's rights under the sale agreement have
been dealt with on the assumption that, according to the common-law
division of property, they are either realty or personalty. It remains
to establish that that assumption is right, and that, consequently,
the contention that the rights must be treated as movables or
immovables -- as distinguished from personalty or realty -- does not
govern in this case. On this point I rely upon the case of In re
Hoyles; Row v. Jagg, [1911] 1 Ch. 179, 80 LJ Ch 274 . There a
domiciled Englishman, by his will, gave to charities in England
several mortgages on land in Ontario. By the Mortmain Act then in
force in England, such gifts of mortgages on English land were void.
The same Act had been adopted and was in force in Ontario as regards
Ontario land. In delivering judgment, Farwell, L.J., at p. 185,
states:
But it is argued that if a testator domiciled in England devises to a
charity a mortgage on land in Ontario, or a testator domiciled in
Ontario devises to a charity a mortgage on land in England, the
statute has no application in either case. It is sought to establish
this amazing proposition by an argument founded on the division of
property in certain cases into movable and immovable. But this
division is no part of the law either of England or of Ontario; in
both England and Ontario the division is into real and personal
property. The division into movable and immovable is only called into
operation here when the English Courts have to determine rights
between domiciled Englishmen and persons domiciled in countries which
do not adopt our division into real and personal property. In such
cases, out of international comity and in order to arrive at a common
basis on which to determine questions between the inhabitants of two
countries living under different systems of jurisprudence, our Courts
recognize and act on a division otherwise unknown to our law into
movable and immovable. But when there is no such difficulty there is
no ground for attempting any such division. In this case the law is
the same in both countries; the mortgaged property savours of the
realty in both countries; the Statute of Mortmain applies in both
countries; and any argument founded on what would be the case if the
law of Ontario required us to consider movables and immovables is
merely hypothetical and has no application to the present case. There
is no necessity for ascertaining which law is applicable because the
law in both countries is the same.
43 That law, which is so declared to be applicable to individuals,
Mr. Stubbs contends is not applicable to provinces or states. He cites
no good authority for this contention, and I can find none. In reason,
I can see no grounds for such a distinction. If that law is applicable
to individuals, why not to private cor****ations? And if to private
cor****ations, why not to public cor****ations, or to municipalities, or
to provinces? In my opinion, then, this case falls to be decided
according to the common-law division of realty or personalty. But even
if the civil-law division were followed, it could not change the
nature of the vendor's rights so as to make them interests in land
(whether called realty or immovables) when they are in law only
interests in money (whether called personalty or movables). The result
must be the same under either division.
44 Thus far I have dealt with this case on the footing that the
law which defines and governs a vendor's rights under a sale
agreement, such as the one under consideration here, is the same in
Saskatchewan as in Manitoba. I am satisfied that the law is the same.
Each province has drawn its relevant law from one and the same source
-- neither has changed that law by statute. That much is acknowledged.
But a few decisions of the courts of Saskatchewan seem to indicate,
not that the Saskatchewan law differs from that of Manitoba, but that
a vendor has an equitable or beneficial interest in the land sold by
him until he is paid in full: Weidman v. McClary Mfg. Co., supra;
Condon v. Gassall and Drinkle, [1928] 3 W.W.R. 719, 23 Sask. L.R.
272 . One other decision, In re Trustee Act; In re Burke Estate,
[1927] 3 W.W.R. 718, 22 Sask. L.R. 142 , expressly holds that a
vendor's interest is an immovable, and so devolves to his heirs under
the Saskatchewan law.
45 The Weidman case, supra , had to decide whether an execution
filed by a judgment creditor of the vendor created a charge on land
which the vendor had sold under an agreement for sale, but for which
he had not been paid in full. The court, en banc , unanimously held
that the execution did not create any charge on the land, nor form any
lien on the unpaid purchase-money. But at p. 214, Haultain, C.J.S.,
speaking for the majority, says:
Whatever that undefined thing, a vendor's interest, may be, it seems
to me that a vendor who has agreed to sell but retains the legal title
as security for the payment of his purchase money has, until full
payment has been made, a beneficial interest in the land, which,
coupled with the legal title, may be seized and sold under execution,
subject of course, to the general equitable principles already stated.
There is a great conflict of authority on this point.
46 That statement, of course, must be read as an interpretation of
the Executions Act , with which the court was dealing. At the same
time it seems broad enough to sup****t, in a way, the claim which
Saskatchewan herein urges so strongly in this action. However,
Newlands, J., who agreed in that decision, expressed the view that
because "the plaintiff had the right to continue making his payments
under the agreement for sale, ... the completion of these payments
gave him the whole beneficial interest in the land from the date the
agreement was entered into, from which date it ceased to be the land
of the execution debtor and to be liable for his debts." Newlands, J.
adopted the statement of James, L.J. in Rayner v. Preston, supra .
Other decisions in Saskatchewan on execution cases follow, or are in
line with, the Weidman case, supra .
47 In reference to all these execution cases, it is to be noted
that by The Land Titles Act , RSS, 1940, ch. 98, "land" is defined as
including "every estate or interest" in land "whether such estate or
interest is legal or equitable" (sec. 2 [10]); and that an
"execution," when filed against land of the judgment debtor, creates a
"charge" or "en***brance" against that land (sec. 2 [6]). The Weidman
case, therefore, must mean that the unpaid vendor had no equitable
estate or interest in the land which could be charged by the
execution, and that, although he held the estate, he held it only in
trust for the purchaser and was not the owner of any beneficial
interest available for execution purposes. The purchase-money which
was paid in that case after the execution was filed was the thing or
asset of value which the judgment creditor sought to reach, but
failed. He might have attached it by garnishment.
48 The dictum of Haultain, C.J.S. seems inconsistent with his
judgment. At any rate, that case, and those that followed it, show
that at least after payment in full and before transfer is issued the
vendor of land holds the legal title as bare trustee for the
purchaser. If the vendor had any "beneficial interest" in the land
while any part of the purchase-price remained unpaid, that interest
ceased with the debt. In other words, the interest was in the money
receivable. If that interest in money can be called an interest in the
land, it is difficult to understand how the vendor could be divested
of that realty interest without any act whatever on his part, i.e., by
the act of the purchaser only. Interests in real property are not
disposed of by such a method. Moreover, while any part of the purchase-
money remained outstanding, the vendor, exercising his lien, could
refuse to transfer the land; but, when all money was paid, he was
bound to transfer it. From that it follows that the dictum of the
learned chief justice seems not to express the law in Saskatchewan on
the point at issue in this proceeding.
49 The Burke case, supra , was a decision of Taylor, J. in
chambers. The salient facts of the case are that a man named Burke,
resident and domiciled in the state of Wa****ngton, U.S.A., died there,
leaving surviving him his wife and three children. His assets included
his interests, as vendor, under two agreements for the sale of
Saskatchewan land. Limited administration was taken out in
Saskatchewan, and an application was made for directions concerning
the distribution. The learned judge held that the vendor's interests
were immovables and, as such, were located with the land in
Saskatchewan and would devolve according to the law of that province.
50 It is to be noted that the application was concerned primarily
with The Devolution of Estates Act , RSS, 1920, ch. 73, and that both
counsel thought that the interest of the deceased was personalty and
should be dealt with as such. Also, that the learned judge, who
embarked upon his own investigation of the law, states significantly
that "no case can be cited, or apparently found, directly to the
point;" and that no "statute bearing upon the question" was referred
to or found. He relied upon general authorities, many of which I have
referred to herein, and all of which indicate that the basic
authorities upon which he relied are as applicable to this case as to
the Burke case.
51 The learned judge seems to have drawn three main conclusions:
The first -- and perhaps the controlling one -- was that the civil-law
divisions of property -- movables and immovables -- had to be applied.
If the law of the state of Wa****ngton was different, as it seems to
have been, from that of Saskatchewan, so far as relates to the
vendor's interest under the agreement, the civil-Law division was
properly applied: In re Hoyles; Row v. Jagg, supra .
52 His next conclusion was that if the vendor's interest was an
immovable, it excluded our equitable doctrine of notional conversion.
He thought that the reasons underlying notional conversion were not
applicable to the case of a foreigner dealing with Saskatchewan land.
With respect, I think that conclusion is unjustified. As already
shown, a vendor's interest under a sale agreement is, and of necessity
must be, the same under the civil-law or the common-law division of
property. Its nature cannot be changed by a mere change of name. The
law of Saskatchewan is the law that controls -- not the civil law. The
vendor's remedies in Saskatchewan show what his rights are in that
province, namely, rights to collect the purchase-money and to hold his
legal title as a lien for security until payment is made. Moreover
this conclusion of the learned judge seems to be in conflict with the
decision of the full court in the Weidman case already mentioned. In
one sense, also, it seems to be out of harmony with a case decided by
the same learned judge a few months before, In re MacDougall Estate,
[1927] 1 W.W.R. 612, 21 Sask. L.R. 397 . in that case a testator had,
by will, devised a parcel of land, but later sold the land under an
agreement for sale. After his death the question was raised whether,
under the will, the money proceeds of the sale should go to the heir
or to the next of kin. Following In re Church, supra , the learned
judge held, in effect, that by the sale agreement the vendor had
parted with all his estate in the land, and that his rights thereafter
were only rights to the purchase-money, and, as such, passed as
personalty, not realty. Thus he applied the equitable doctrine of
notional conversion.
53 The third conclusion of Taylor, J. is that the purchaser got
only what a court of equity would give him by way of specific
performance; that, in Saskatchewan, specific performance would not be
decreed against a foreign vendor; and that therefore the vendor
retained the full owner****p of the land "subject to the agreement for
sale." But specific performance will be decreed in a proper case
against a foreign vendor: Burley v. Knappen (1910) 20 Man R 154, 13
WLR 715. Such a decree will go where the court has jurisdiction over
the persons involved, because, if the foreign vendor refuses to
comply, the court having jurisdiction also over the land can vest it
in the purchaser.
54 On the whole, the decision in the Burke case, supra , seems to
be against the principles of law as laid down in the cases I have
already cited, which are applicable to Saskatchewan as well as
Manitoba.
55 My general conclusion is that in Saskatchewan as well as in
Manitoba the vendor's rights under the agreement for sale here in
question are only personalty -- rights to the purchase-money. When,
therefore, those moneys were paid in full after the vendor's death,
the vendor was, by relation back to the date of the agreement, and
from that date, only a bare trustee, of the legal title, for the
purchaser, and so had no interest in the land.
56 The debt was located in Manitoba. The purchase-money was
payable here by virtue of the contract. This fact is a strong feature
of its location. But whether or not that fact is decisive, the
agreement, being under seal, was a specialty, and, consequently, the
specialty debt was located in Manitoba. Dealing with the location of
debts, Lord Field, in Commissioner of Stamps v. Hope, [1891] A.C.
476 , at 481-2, 60 LJPC 44, made the following observations which,
though made in a revenue case, are of general application. He says:
Now a debt per se , although a chattel and part of the personal estate
which the probate confers authority to administer, has, of course, no
absolute local existence; but it has been long established in the
courts of this country, and is a well-settled rule governing all
questions as to which court can confer the required authority, that a
debt does possess an attribute of locality, arising from and according
to its nature, and the distinction drawn and well settled has been and
is whether it is a debt by contract or a debt by specialty . In the
former case, the debt being merely a chose in action -- money to be
recovered from the debtor and nothing more -- could have no other
local existence than the personal residence of the debtor, where the
assets to satisfy it would presumably be ... and inasmuch as a debt
under seal or specialty had a species of cor****eal existence by which
its locality might be reduced to a certainty, and was a debt of a
higher nature than one by contract, it was settled in very early days
that such a debt was bona notabilia where it was 'conspicuous,' i.e.,
within the jurisdiction within which the specialty was found at the
time of death: See Wentworth on the Office of Executors , ed. 1763,
pp. 45, 47, 60. See also ed. 1829, p. 108. [Italics are mine.]
57 A debt is "conspicuous" where it can be effectually dealt with
and has its location there.
58 Even if the unpaid vendor was in a position similar to that of
a mortgagee, as Haultain, C.J.S. seems to say in his dictum in the
Weidman case, supra , the location of the debt would not be where the
security lay, but where the specialty was found at the death.
59 In 13 Halsbury , 2nd ed., p. 248, par. 238, it is written:
Under the English legal system a debt secured by a mortgage of land is
in character primarily a debt, with an accessory right to resort to
the land for payment, not an estate in land, measured by the amount of
the debt; its locality as an asset of the mortgagee is therefore to be
determined prima facie under the rules relating to debts.
60 And for the purpose of determining the character of a mortgage
debt -- that is, whether the debt is the primary thing and the
mortgage the ancillary thing -- a mortgage under The Land Titles Act
is not "in any different position from a common law mortgage with its
consequential equities:" Per O'Bryan, J. in In re Williams; National
Trustees Executors & Agency Co. of Australasia v. Brien, [1945] VLR
213 , at 224.
61 My answer to the first three questions submitted, which I have
combined into one, is that upon the death of the late Jane Hole,
intestate and heirless, all her assets, including her rights under the
said sale agreement, become bona vacantia , and, as such, immediately
became the property of His Majesty the King in the right of the
province of Manitoba.
62 The remaining question has to do partly with the debts of the
estate, and how far, if at all, the creditors are entitled to look to
bona vacantia for payment. Some of the debts were contracted by the
intestate in her lifetime; the others have been incurred since her
death in and about the administrator's search for heirs and in the
management of the assets. Any question of whether these debts should
be allocated for payment out of realty or out of personalty loses all
significance in view of my holding that there is no realty involved.
All the assets are personalty.
63 The question, then, is whether or not the province of Manitoba,
upon becoming the declared owner of all these assets, is bound to
discharge the liabilities of the estate. The answer to this question
must be in the negative. The debts are not in any way secured by or
attached to the assets. Mrs. Hole's death separated the assets from
her liabilities. The crown has taken the assets but is under no
obligation to take her liabilities -- the latter remain unwanted.
64 The expenses which have been incurred since Mrs. Hole's death
are on a different footing. As regards all the debts and obligations,
the province, acting in the name of the sovereign, will be assumed to
act fairly towards these creditors, and I fully expect that -- as an
act of grace, if nothing more -- the province will settle and pay all
these debts.
65 I cannot close this judgment without expressing my appreciation
for the able assistance given by all counsel in this difficult case,
which, being unusual, has necessarily involved a great deal of
research. I regret that, because of cir***stances beyond my control, I
have been unable to deliver this judgment sooner.
66 As to costs: In the special cir***stances of this case -- the
sovereign acting in a dual capacity -- there will be no order for
costs as between the two claimants. The administrator, however, should
be paid its costs of and incidental to the administration and this
proceeding, out of the assets.
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