by sale of estates, sold by auction, for the redemption of land tax(e).

By an order of Lord Rosslyn's(f), it is directed, that upon application by a mortgagee of a bankrupt's estate, the mortgaged estate shall be sold before the commissioners, or by public auction, if they shall think fit. And it has been decided(g), that a sale of a mortgaged estate by auction, under this order, is liable to the auction duty, and is not within the exception in the acts of sales of bankrupts estates by the order of the assignees. This decision was made at nisi prius, and, perhaps, cannot be supported. The Legislature intended that the creditors of bankrupts should have the advantage of selling the estates by auction without being charged with the auction duty. Now this intention is, in the case under consideration, clearly subverted by the decision in Coare v. Creed. The argument was, that the sale was by the mortgagee, and so not part of the bankrupt's estate. But if the money produced by sale of the pledge is insufficient to cover the mortgagee's debt, he of course resorts to the general effects for a dividend on the residue. If the pledge produce more, the surplus sinks into the general fund; so that assuming, as the Legislature clearly did, that the auction duty is in substance a charge on the land, it in this case takes so much from the bankrupt's property, distributable for the benefit of his creditors. It was considered to be clear, however, that where the estate was sold by order of the assignees, with the consent of the mortgagee, no duty would be payable. But it has been decided, that a sale by assignees of an estate in fee, which was in mortgage for a term of years, was liable to the auction duty, because the assignees sold the whole

(e) 42 Geo. III. c. 116. s. 113.

(f) 4 Bro. C. C. at the end.

(g) Coare v. Creed, 2 Esp. Ca. 699.

estate, and they had only the equity of redemption(h). But the act of Parliament draws no such distinction. Most bankrupts estates are in mortgage; and the exception would indeed be illusory, if it only extended to estates upon which there was no incumbrance. The simple question, however, is, whether such a sale is not a bona fide sale by order of the assignees? It seems, indeed, to have been considered, that the mortgagee had the property, and the bankrupt had only the equity of redemption. But, even at law, the bankrupt had the fee-simple in reversion expectant upon the term of years in the mortgage, and in equity he was owner of the fee in possession, subject to the debt. The case of the King v. Abbott went far beyond the case of Coare v. Creed. To avoid the effect of these decisions, assignees must, in future, sell the estate subject to the mortgage. The purchaser must, of course, pay off the mortgage; and therefore, by the insertion of a few words in the particulars, the creditors may obtain the relief which the Legislature intended to grant them.

The words of the late act(i) are, that "all sales of any real or personal estate of any bankrupt or bankrupts shall not be liable to any auction duty," which may probably remove all difficulty upon this point. Since these observations were published, the point came before the Court of Exchequer upon a sale by auction, by assignees, of the absolute interest in fee of an estate of the bankrupt in mortgage; and it was held, that the duty was not payable(j). Upon a writ of error in the Exchequer Chamber the judges were divided in opinion, and the judgment below was affirmed, in order that the question

(h) Rex v. Abbott, Excheq. Mich. T. 1816, MS.; 3 Price, 178. (i) 6 Geo. IV. c. 16. s. 98.

(j) Rex v. Winstanley, 3 You. & Jerv. 124. 2 Dow & Clark, 302.

might be disposed of in the House of Lords(k), and there the judgment has been affirmed(). Two questions were put to the judges: 1st. whether, when a trader, having real estates under mortgage, becomes a bankrupt, and the whole interests in the estates are sold, by order of the assignees, for the benefit of the creditors, and no concurrence on the part of the mortgagees appears, the auction duty is payable on the whole of the sum received for the estates, or on any and what part of it: 2dly. Whether, when a trader, having estates in mortgage, afterwards conveys the estates to trustees, and then becomes bankrupt, and the whole interest in the estates are sold by the assignees, with the concurrence of the trustees, it not appearing that the mortgagees were consulted, the auction duty is payable on the whole or any part of the sum received for the estates.

Mr. Justice Bayley delivered the unanimous opinion of the judges, in answer to both questions, that the auction duty was not payable on the whole or any part of the sum; observing, that if this had been a sale by the mortgagee, the matter might have stood on a different footing. Lord Wynford observed that he was in the court below when this case was decided there, and he differed in opinion from the rest of the judges. He was happy to say, however, that, upon fuller consideration, he was convinced that they were right and he was wrong. His puzzle was about the word estate, and whether the estate in question, being in mortgage, could be considered as the estate of the bankrupt. But he was now satisfied that, speaking in ordinary language, this is the estate of the bankrupt, clogged with the debt of the creditor. The mortgage is merely a security, and every other in

(k) 3 You. & Jerv. 126.

(1) 2 Crompt. & Jerv. 434; 2 Dow & Clark, 302.

terest is in the bankrupt; and therefore, upon a sale of the estate by the commissioners or assignees, the sale is exempt, under these acts of Parliament, from payment of the auction duty. Suppose the bankrupt's funds should not be sufficient to pay the creditors, after paying off the mortgage, the loss must fall on the bankrupt's funds. Suppose the whole subject should be swallowed up by the mortgage, the mortgagee might say that he derived no advantage from the sale beyond the mere payment of his debt. Suppose a third case; that the funds, after payment of the mortgagee and the rest of the creditors, should afford some small surplus for the unfortunate bankrupt, yet the sale being a forced sale, came in principle within the exemption under these acts. He had his doubts as to the soundness of the present judgment, looking to the decision in the case of the King and Abbott; but he was now satisfied that the judgment ought to be affirmed. Lord Tenterden observed that he entirely agreed in the opinion of the Judges. There was some difference in the language of the different acts relating to this subject, which occasioned some doubts; but the words of the statute of 19 Geo. 3. c. 56. s. 15. are, "that nothing therein contained shall extend to charge with auction duty any estate or effects of bankrupts sold by order of the assignees under a commission of bankruptcy." The words, of the 43 Geo. 3. are much the same; and then came the case of the King and Abbott. Then followed the Act of the 6 Geo. 4, which enacted, "that all sales of any real or personal estate of any bankrupt or bankrupts shall not be liable to any auction duty;" and the question is whether the estate sold in this case was the estate of the bankrupt within the meaning of these acts. Now, when we look at the words of an act of Parliament, which are not applied to any particular science or art, we are to construe them as they

are understood in common language; and in ordinary speech, the estate, although mortgaged, is still considered as the estate of the mortgagor, and the interest of the mortgagee as merely a security; and, therefore, it appeared to him, that, according to the true construction of the words, this was the estate of the bankrupt within the meaning of the act. If they were to be taken in any other sense, the effect would be to diminish the bankrupt's estate applicable to the payment of the creditors, by the amount of the duty. Upon the whole, it appeared to him, that according to the intention and the words of the act of the 6 Geo. 4, no auction duty was payable on estates sold under such circumstances as the present.

The point therefore is decided against the liability to duty where even the whole estate is sold, provided the mortgagee do not join in the sale; of course, his concurrence in the conveyance will not render the sale liable. The point is still open where the mortgagee does concur in the sale; and therefore where the property is sufficient in value to pay off the mortgage, the sale should be by the assignees alone.

The auctioneer, agent, or seller by commission, is bound to pay the auction duty, which he may deduct out of the money he receives at the sale. If he receive none, he may recover it from the vendor by action.

But if the owner of estates sold by auction, or any other person on his behalf, buy in the same, without fraud or collusion, no auction duty will become payable (m); provided notice be given in writing(n) to the auctioneer before such bidding, signed by the owner and the person intended to be the bidder, of the latter being appointed by the former, and having agreed accordingly to bid at the sale for his use(o); and provided the delivery of such

(m) 19 Geo. III. c. 56. s. 12.

(n) 28 Geo. III. c. 37. s. 20.

(0) See a form of such notice, Appendix, No. 1.