1905 ISLES v. ISLES. help out a conclusion which the mere fact of the existence of the A'BECKETT, J. disease would not warrant-even where, as in this case, the wife's conduct was free from suspicion. I have here the facts that when cured she refused to allow her husband to cohabit with her, on the ground of his misconduct, and that he submitted to her refusal and continued to support her after it; that though he never admitted his adultery he never unequivocally denied it either in conversation or in the course of the correspondence which was carried on between them after separation. He was also personally served with the petition, and has not defended the suit. Taking these matters into consideration, I feel warranted in granting a decree on the ground of a repeated act of adultery. Proctor for the petitioner: W. T. C. Kelly. J. M. DRYSDALE v. DRYSDALE. Marriage settlement-Construction-Covenant to settle after acquired property- By a settlement made in consideration of marriage, the settlor covenanted that if he then was or should during the intended marriage become possessed of or entitled to any property not exceeding in value the sum of 10,000l., then and in every such case he should, as soon as circumstances would admit, convey and assign such property to his intended wife upon the trusts therein set forth. At the date of the deed the settlor was not the owner of property of any value, but during the marriage he acquired property of considerable value, and at the date of his death had assets of the value of about 10,000l. (inclusive of two policies on his own life of the value of 23507.) and liabilities to the extent of about 50007. No property was ever settled pursuant to the deed. Held, that the covenant bound the settlor to transfer to the trustee of the settlement from time to time any property of which he became owner until the aggregate value amounted to 10,000l., but that, as between the creditors of the settlor and the trustee of the settlement, the creditors had the priority. Held further, that the policies of life insurance were within the covenant to settle and bound by it. ACTION. This was an action brought by Ella Mary Drysdale, the trustee of a marriage settlement made between herself and her late husband, Henry H. Drysdale, against Harry Erskine Drysdale, Ida Drysdale, Ronald Drysdale, Beatrice Y. Drysdale, Euphemia R. Drysdale, and Kate Bodenheimer (beneficiaries under the will of Henry H. A'BECKETT, J. 1905 November 16, 30. A'BECKETT, J. Drysdale), the Equity Trustees Executors and Agency Co. Ltd. (as 1905 DRYSDALE υ. DRYSDALE. executor of the will of Henry H. Drysdale), and James Anson Wheeler (on behalf of himself and all others except the plaintiff creditors of the estate of Henry H. Drysdale), seeking to enforce a covenant in the deed of settlement. The defendants Ida Drysdale, Ronald Drysdale, and Beatrice Y. Drysdale were infants. All the facts are fully set out in the judgment of a’Beckett, J. Weigall for the plaintiff (the trustee of the settlement)—If a man covenants that he will convey any property he may become possessed of or entitled to to trustees on certain trusts, the effect in equity is that as soon as he acquires any property it is treated as being property subject to the trusts of the settlement. Mr. Drysdale by this covenant bound property he became entitled to with the trusts of this settlement in priority to all other claims. 10,000l. worth of property should be settled on these trusts before any of the debts are paid: Leake on Contracts (4th ed.), pp. 803, 804; In re Clarke, Coombe v. Carter (a); Re Kelcey (b); Re Reis (c); Davenport v. Bishop (d). The covenant applies equally to insurance policies: In re Turcan (e). Bryant for the infant defendants. Pigott for the Equity Trustees Executors and Agency Co. Ltd. -The words of the settlement do not naturally cover the life policies, and unless these policies can be taken as being specifically covered by the settlement they are by the effect of the Companies Act 1900 (No. 1699) beyond the reach of the trustee of the settlement as well as the other creditors. He referred to Mueller v. Gair (f). Goldsmith for the defendant James Anson Wheeler-According to the wording of the covenant in this deed, it was only when the settlor had 10,000l. worth of property that the covenant applied. It is a covenant to convey to the trustee of this settle (a) [1887] 36 C.D. 348.. (c) [1904] 2 K.B. 769. (d) [1845] 1 Ph. 698. (f) [1903] 29 V.L.R. 263. 1905 DRYSDALE υ. DRYSDALE. ment 10,000l. of property, real or personal. The covenant is not A'BECKETT, J. binding as against his creditors; it does not create a charge on his property. The most the plaintiff can do is to rank as a creditor of the estate, pari passu with the other creditors. Ex parte Evans (g) is a distinct authority for saying that the trustee is not entitled to claim performance of this covenant in priority to creditors. Again, the settlor is only bound to convey as soon as circumstances would admit." Until his debts had been paid circumstances would not admit of his settling this sum. 66 Cur, adv. vult. A'BECKETT, J., read the following judgment:-In February 1894, Henry Henderson Drysdale, at the suggestion of a friend, a solicitor, executed a deed made between himself and Ella Mary Butler, his then intended wife, containing an agreement in the following words :-" Now "Now this indenture witnesseth that in consideration of the said intended marriage it is hereby agreed and declared that if the said Henry Henderson Drysdale now is or if during the said intended coverture the said Henry Henderson Drysdale shall become seised or possessed of or entitled to any real or personal property not exceeding in value the sum of ten thousand pounds for any estate or interest whatsoever in possession reversion remainder or expectancy then and in every such case the said Henry Henderson Drysdale and all other necessary parties shall at the cost of the said Henry Henderson Drysdale as soon as circumstances will admit convey assign transfer and assure the said real or personal property to or otherwise cause the same to be vested in the said Ella Mary Butler." The deed went on to provide that the property to be made over should be held upon trust for the intended wife during her life, and subject to this for the children of the intended marriage and the children of Mr. Drysdale by a former marriage. The marriage took place shortly after the execution of the deed. Mr. Drysdale died in June 1903. At the date of the deed he was not the owner of property of any value. He lived on an income derived from fees as a director in companies, and from dealings in shares. In the two years preceding his death, he earned large sums, which he invested in (g) [1852] 22 L.J. Bank., p. 5. A'BECKETT, J. debentures, and he also acquired large holdings in companies, the value of which is merely conjectural. made over any property as he agreed to do by the deed. forgot all about it. He seems to have done the same. 1905 DRYSDALE v. DRYSDALE. shares in He never His wife He made a will the beneficial dispositions of which were much the same as those under the deed, appointing his wife and the Equity Trustees Company his executors. He left property valued at over 10,000l., and liabilities estimated at less than 5000l., some of those liabilities representing calls, actual and contingent, on the shares of conjectural value. By the accidental discovery of the deed of February 1894 in a lawyer's office in July 1904, the covenant entered into by Mr. Drysdale became known to the Equity Trustees Company, and they reminded the plaintiff of it. She then instituted the present action against the Equity Trustees Company representing her late husband's estate, a creditor sued as representing himself and other creditors of the testator and beneficiaries under the will, seeking to enforce the covenant in the deed of February 1894. Since her husband's death some of his debts have been paid by his executors, but otherwise the position of the estate remained practically unaltered. The covenant on which the action is brought is not clearly expressed, and is of doubtful intention. None of the defendants have contended that it was confined to property which might come to Mr. Drysdale from some outside source, and did not extend to property which he had purchased for himself from money which he had earned. I take it to be a covenant binding him to make over from time to time to his wife, as trustee, any property which belonged or might at any time belong to him in whatever way he might acquire it, until the aggregate value of the property made over amounted to 10,000l. On this construction of the covenant I have to determine what rights the plaintiff, as trustee of the deed, can enforce against the estate of her late husband. On her behalf the extreme view is presented that all his assets were bound by the covenant, and that she is entitled to obtain property thereout to the value of 10,000l., without any regard to the claims of his creditors, who must go unpaid in whole or in part if subtracting 10,000l. from his assets does not leave enough to pay them. This view seems me most inequitable, and I should not to make an order 66 1905 DRYSDALE V. DRYSDALE. to give effect to it unless I felt obliged to do so by clear A'BECKETT, J. authority. I have not been referred to any authority where, in a like case, and conflict of interests between the creditors of the covenantor and persons claiming under the covenant, the rights of creditors have been subordinated. The validity of a covenant to settle after-acquired property was considered in In re Reis (h). In affirming its validity, Stirling, L.J., went back to the old case of Lewis v. Madocks (i), decided by Lord Eldon, who decreed specific performance. Specific performance seems to be the recognized form of relief open to those who complain of non-performance of such a covenant. Lord Justice Stirling said :—" An objection was made that the covenant was so wide that it would be wrong of the Court to enforce it on the ground that, if fully carried into effect, it would prevent the husband from paying his debts, and deprive him of the means of subsistence. Now, to this objection there appears to me to be two answersfirst, from the covenant in the marriage settlement in the present case the business assets of the husband are expressly excepted, and that appears to me to constitute a substantial exception; secondly, if there was no such exception, it would still seem to me that the same case of Lewis v. Madocks, at a subsequent stage, is an authority for holding that such a covenant is not to be construed so as to prevent the husband from paying his debts and maintaining his family." In Ex parte Boland (k), Bacon, C.J., in his observations on Lewis v. Madocks, said: Lord Eldon seems very carefully to have guarded against the possibility that the person claiming (under the covenant) might be claiming in competition with creditors of the husband, and, in coming to the conclusion to which he did come, he must have considered that the creditors of the intestate husband were entitled to be first paid out of the personal estate." Ex parte Boland as a decision on its own facts is disapproved of in In re Reis, but this disapproval does not involve any dissent from the view taken by Bacon, C.J., of Lord Eldon's decision. If in this case the wife shortly before her husband's death had suddenly remembered his covenant, and brought an action calling upon him to transfer property to the value of (i) [1803] 8 Ves. 150. (k) [1873] L. R. 17 Eq., p. 115. (h) [1904] 2 K.B. 769. |