1879 London Chartered Bank of Australia v. White. J.C. [4 Appeal Cases, 413.] J.C.(*), May 22, 23, 1879. [PRIVY COUNCIL.] LONDON CHARTERED BANK OF AUSTRALIA, Defendant; and WHITE and Others, Plaintiffs. ON APPEAL FROM THE SUPREME COURT OF VICTORIA (IN EQUITY). Banker's Lien-Accounts-Interest. Bankers most undoubtedly have a general lien on all securities deposited with them as bankers by a customer, unless there be an express contract or circumstances that show an implied contract inconsistent with the lien. Brandao v. Barnett and others (1) approved. Held, that the bankers having acquiesced in the finding of the first court, that the securities deposited with them were in respect of specific sums and not on the general account, and not having objected thereto in their grounds of appeal to the Supreme Court, were precluded from raising that question in appeal to the Privy Council. Simple interest only should be allowed on such specific amount, as to a mortgagee. Bankers improperly or without title retaining moneys overpaid to them as mortgagees are chargeable with interest thereon. APPEAL from an order of the Supreme Court (Sept. 21, 1877), affirming with certain variations an order of Mr. Justice Molesworth (May 11, 1877). The principal question sought to be raised in this appeal 414] was, whether certain securities placed by a customer in the hands of the bank ought to be treated as a security for the customer's general account with the bank, or whether they are to be considered as applicable only to the particular advance on the occasion on which they were given. The appellant bank was incorporated by royal charter, and in the year 1858 one Hugh Glass was its customer. He continued so until his insolvency in 1869. The relations between them of banker and customer were ultimately determined by an assignment made by Glass of his estate and effects for the benefit of his creditors on the 3d of December, 1869. The facts of the case and the agreements entered into between Glass and the bank are set out in the judgment of their Lordships. The suit was instituted on the 8th of June, 1876, by the (*) Present:-SIR JAMES W. COLVILE, SIR BARNES PEACOCK, SIR MONTAgue E. SMITH, and SIR ROBERT P. COLLIER. (1) 3 C. B., 531; 12 Cl. & F., 787. J.C. London Chartered Bank of Australia v. White. 1879 respondents the Whites, as second mortgagees of "the Clare stations and stock," against the bank, as first mortgagees thereof and of the "Nouranie run," and the respondents Blackwood and Ibbotson, as second mortgagees of the "Nouranie run," to have their respective rights as mortgagees of the said properties ascertained and determined. The nature of the suit is more particularly set forth in their Lordships' judgment. Other respondents, Nash and Moore, were added as defendants, as being, in manner appearing in the suit, entitled to the equity of redemption of the properties. By the decree dated the 11th of May, 1877, it was ordered that it be referred to the master to take an account of the mortgage debt due to the bank, taking it as on the 1st of July, 1869, as £40,000, bearing interest at £8 per cent., and of the sums received by the bank in satisfaction thereof as mortgagee in possession, and as sellers of the corpus of the securities of Clare stations and the stock thereon, and the Nouranie station; and it was ordered that in taking the account the bank have credit over all expenses and disbursements for the purchase-money of the freehold of part of the last-mentioned station, and be charged with the price received on the sale thereof; and it was also directed that the account be taken with convenient rests reducing principal, but that no interest upon interest be allowed; and it was declared that on taking the *accounts the bank [415 was not to be allowed anything for costs and expenses connected with the conveyance of the 3d of December, 1869, or for payments made to creditors of Glass in arranging for the conveyance (without prejudice to any other remedies which the bank might have for recovering the same); and it was directed that the bank should not be allowed in that account for any costs in a suit in the Supreme Court of New South Wales in the bill referred to; and the master was directed in taking the account to allow the bank disbursements and expenses for the Clare stations and stock paid and furnished by the plaintiffs, as well as those made and paid by itself, and to fix the time when, according to the accounts, the bank should be deemed to be overpaid, and to compute the sum which the bank should be deemed to be overpaid, charging it with interest on that overpayment, and all subsequent clear receipts at the rate of 8 per cent. per annum to the making of his report; and the master was also directed to take the above accounts, not giving the bank credit for disbursements paid and furnished by the plainand it was declared that the plaintiffs were entitled to tiffs; 1879 London Chartered Bank of Australia v. White. J.C. the difference of the results of the two accounts; and it was declared that the plaintiffs should be treated as subject to pay the costs of the bank properly incurred in defending the suit in New South Wales above referred to, not recoverable from the plaintiffs therein; and it was referred to the master to ascertain the same; and it was directed that the last two sums be set off one against the other; and it was declared that the plaintiffs and the defendants, James Blackwood and Charles Ibbotson, were entitled to have the sum which might remain in the hands of the bank according to the first account, subject to such costs as might be made payable thereout, divided according to the direction next following. And it was declared that the bank should have been paid its debt of £40,000 and interest out of the Clare stations and sheep and the Nouranie stations ratably, according to ther respective values as might appear by the sums actually realized thereout respectively by the possession and sales thereof, and having regard to interest as to the different dates of the receipt of such sums; and it was referred to the master to take an account of the sums contributed to the payment of the debt by the properties re416] spectively over and above the sums *which they should have contributed, and according to the result to appropriate the said balance between them; and by consent it was directed that thenceforth the bank should hold £4,239 17s. 1d. of the sum then in its hands at interest at the rate of £4 percentum per annum for six months from the date of the decree, instead of at the rate of £8 percentum, without prejudice to the right of the parties to dispute the sum due, and further consideration and costs were reserved. The bank appealed, and the Supreme Court was divided in opinion as to whether the banking account could be considered as covered by the securities of the 8th of April, 1868. By the order on appeal, dated the 21st of September, 1877, it was ordered that the appeal be allowed, and that the decree be varied by striking out so much thereof as declared that on taking the accounts the bank was not to be allowed anything for costs and expenses connected with the conveyance of the 3d of December, 1869, or for payment made to creditors of Glass in arranging for the conveyance without prejudice as therein mentioned. And it was referred to the master to inquire and report whether the bank ought to be allowed any and what sum for such costs, expenses, and payments as aforesaid as against the plaintiffs and the defendants, James Blackwood and Charles J.C. London Chartered Bank of Australia v. White. 1879 Ibbotson, or any and which of them; and it was ordered that the decree be further varied by striking out so much thereof as directed the master to charge the bank with interest on the overpayment to the bank therein mentioned, and on all subsequent clear receipts at the rate of £8 per cent. per annum to the making of his report, and in lieu thereof the master was directed to charge the bank with interest at the rate aforesaid on so much only of the overpayment as the bank had theretofore claimed to retain as mortgagee, but to which, on taking the accounts directed by the decree, the bank should appear not to be entitled ; and with these variations the court affirmed the decree, and the court did not think fit to give the costs of the appeal to any of the parties appearing therein. Mr. Kay, Q.C., and Mr. MacNaghten, for the appellants: The order appealed from ought to be varied by declaring that the bank had a general lien on the securities of the 8th of April, *1868, placed in their hands, and could [417 hold the same against the balance from time to time owing by Glass on his general account, Brandao v. Barnett ('); Jones v. Peppercorne (), where it was held that the general lien of a banker is not excluded by a special contract unless the terms of that special contract are inconsistent therewith: Johnston's Case(); Mosse v. Salt (*); Agra Bank Case(); Ex parte Trethowan, Ex parte Tweedy (). Here there was no contract, express or implied, inconsistent with the bank's lien. Therefore whatever was due to the bank by Glass before the notices of the 3d of June and 27th of July, 1869, was secured by the deposits in their hands on which the bank had a general lien. After those notices the bank, of course, could not charge against the subsequent mortgagees advances made thereafter: Hopkinson v. Rolt ('). With regard to the claim of the bank to make half-yearly rests converting interest into principal: see Fergusson v. Fyffe (); Crosskill v. Bower (); Williamson v. Williamson (); Rufford v. Bishop ("). With regard to the items of costs, it was submitted that as regards the rival claimants to the suplus proceeds arising from the securities either could have taken interpleader proceedings, while the bank could not pay either of them until their rights were adjusted () 3 C. B., 531; 12 Cl. & F., 787. (*) Joh., 430. (3) L. R., 6 Ch. Ap., 212. (4) 32 Beav., 269. (6) 5 Ch. D., 559; 22 Eng. R., 307. (7) 9 H. L. C., 514. (*) 8 Cl. & F., 139. (9) 32 Beav., 86. (10) Law Rep., 7 Eq., 542. (5) Law Rep., 8 Ch., 41. (11) 5 Russ., 346. 1879 London Chartered Bank of Australia v. White. J.C. by the court. The bank was not chargeable or charged with misconduct, and there was no ground for depriving the bank of costs, or for reserving the costs to abide the result of the accounts: Cotterell v. Stratton (1). Nor was there any ground for charging the bank with interest on any part of the surplus proceeds in its hands. It was also contended that the bank was entitled to the full costs of defending its securities in the suit brought by Blackwood and Ibbotson. Mr. Southgate, Q.C., and Mr. Cecil Russell, for the respondents: The securities of the 8th of April, 1869, could 418] not be charged in *favor of the bank with any principal moneys other than the original loau of £40,000, and one moiety of the sums expended for working expenses in carrying on the Clare stations. Securities taken in the manner and on the terms upon which these were taken exclude the general lien: see Mosse v. Salt (2) and analogous cases, where it has been held that solicitors taking securities for special purposes have lost their general lien: Vaughan v. Vanderstegen ('); Pelly v. Wathen (). In particular the bank was not entitled to charge thereon any allowances made to Glass either before or after the 2d of June, 1869. A man cannot have possession in two characters, first, as mortgagee, and second, as banker. The one excludes the other. Reference was then made to Ex parte Trethowan (†). With regard to the claim of compound interest made on the other side, that is not chargeable under the circumstances of this case. With regard to the point made upon the other side as to the bank's not being liable for interest on the surplus proceeds retained by it, see Quarrell v. Beckford (); and as regards its claim for costs said to have been incurred in defending its securities, see Parker v. Watkins ('); Walters v. Woodbridge ("). As to reservation of costs; where an overpayment is alleged it is the practice to reserve the costs until the result of the account directed by the court is known. Cotterell v. Stratton (') was a decision on further consideration. Mr. Kay replied. The judgment of their Lordships was delivered by SIR ROBERT P. COLLIER: The material facts of this case may be thus stated: In the year 1858 one Glass became (if he had not been before) a customer of the appellants the (1) Law Rep., 8 Ch., 295. (2) 32 Beav., 269. (3) 2 Drew., 413. (4) 7 Hare, 351. (5) 5 Ch. D., 559; 22 Eng. R., 307. (6) 1 Madd., 269. (1) Joh., 133. (*) 7 Ch. D., 504; 23 Eng. R., 666. |