Innes (with him Milner Stephen), for the respondent trustees.

I agree in the judgment which will be read by my brother Isaacs, and which, in my view, covers the case.

The first question to which I shall address myself is, as to whether the bequest of "all moneys, stock and funds which I shall die possessed of," is specific or residuary. In my opinion it is specific.

In Robertson v. Broadbent[1] Lord Selborne L.C., in speaking of the exemption of personal estate specifically bequeathed for the payment of legacies and debts, instances the bequest of a particular chattel, in which case it passes in statu quo, and then he adds: - "As against creditors the testator cannot wholly release it from liability for his debts; but as against all persons taking benefits under his will he may. The same principle applies to everything which a testator, identifying it by a sufficient description, and manifesting an intention that it should be enjoyed or taken in the state and condition indicated by that description, separates in favour of a particular legatee, from the general mass of his personal estate, the fund out of which pecuniary legacies are in the ordinary course payable."

"This reasoning," says the learned Lord Chancellor, "does not apply to a gift in general terms of the whole personal estate to which a testator may be entitled at the time of his death."

See also per the same learned Lord in Giles v. Melsom[2] and per Jessel M.R. in Bothamley v. Sherson[3], as explained by that learned Judge in In re Ovey; Broadbent v. Barrow[4], affirmed as Robertson v. Broadbent[5].

Applying the statement of the law so laid down to the present case, I am of opinion the bequest referred to is specific. The contrary position really rests on an enlarged meaning sought to be given to the word "money." It regards that word as equivalent to "personal estate," and then treats the subsequent reference to particular portions of the testator's property, as a cautious enumeration to ensure their inclusion. In re Cadogan; Cadogan v. Palagi[6] and In re Green; Baldock v. Green[7] were relied on. But of those and all other cases, I would say that they are useless as guides except for the principles they contain or exemplify. Rules of law or construction are to be observed, and may govern the interpretation, as pointed out by Lord Wensleydale in Greville v. Browne[8], but apart from them, each will must stand alone for the purpose of ascertaining the intention of its maker. As Wilmot L.C.J. said as far back as 1768, in delivering the opinion of the Judges to the House of Lords in the case of Keiley v. Fowler[9]: - "In questions of intention, cases, unless they coincide in words, and every other circumstance, never assist, but perplex the exposition. A will is the picture of a man's mind; and one may as well look at the picture of one man to know the person of another, as look at the will of one mind to know the mind of another."

But when examining the will of an individual testator to ascertain his intention, one rule of common sense asserts itself. I have stated it in an earlier case, Knight v. Knight[10], in terms which are equally suitable to the present, and I will repeat a few words of what was then said: - "Undoubtedly, a testator has the right to choose his own vocabulary, and the right to use words in any sense he pleases, however arbitrary. But, as he is announcing his desires to persons who he knows are accustomed to understand language in its ordinary sense, unless some special meaning is intimated, it is obvious he expects them not to depart, either by enlargement or restriction, from the ordinary signification of his words without a distinct indication to do so. If there be such indication it must, of course, be followed."

Then I take the ordinary signification of the phrase "money of which I am possessed," which is shewn by Lord Selborne in Byrom v. Brandreth[11] to be cash in personal possession or in the house or at the bank or otherwise in such situation that it is ready money at call at the time of death. Context may extend it, or the necessary implication arising, for instance, from some direction given, which would be wholly or partially unfulfilled unless the word was extended, may suffice as an indication of enlarged signification.

And to that extent it is lawful to attribute the larger meaning.

The provision which says that the proceeds of the Waverley Road and Wallis Street allotments are, together with the balance of moneys remaining after the payment of legacies, to be applied in payment of the mortgage debt and interest over Lonsdale Terrace, is followed by a declaration that "any money remaining thereafter I give absolutely to my said wife." Now, unless that includes the produce of the "stock and funds," or the stock and funds themselves, previously given in trust, there is no beneficial gift of that property. Then, turning back to the gift itself, we find that the money, stock and funds he is possessed of and the policy moneys are given "and all benefit derivable therefrom to my said wife Fanny Lowther upon trust to pay and apply the same as in manner hereinafter provided." One, therefore, expects to see a direction as to the application of the stock and funds or "the benefit derivable therefrom," which means money, as well as of the ready money; and so it is not difficult, connecting first the terms of the gift, next the direction to apply the moneys both those he was possessed of and the policy moneys, and lastly the beneficial gift of the balance of money absolutely, to see that he must have considered stock and funds to be really equivalent to or synonymous with "money."

But this still leaves the nature of the bequest specific, and if we search for any further expansion of the expression "money" no such indication is found. I am, therefore, of opinion that the contention as to this bequest being residuary fails.

Next, it was urged that the devise of the realty was subject to her paying out of the rent and income thereof, the principal of the mortgage debts as well as interest. In support of this the words "interest moneys costs and charges taxes &c." were read as if the words "interest" and "moneys" were independent and severally complete. It was suggested that to speak of "interest moneys" was so improbable and indeed inartistic as to invite rejection. But that is not so; Molle's mortgage of 20th April 1883 contains in the fourth covenant the phrase "the principal and interest moneys" and this was one of the mortgages referred to by the testator. Again in sec. 62 of the Real Property Act we find the expression "interest moneys." It cannot therefore be regarded as inherently objectionable. Then we have to remember the devisee is a life tenant at most - properly speaking the estate is during widowhood, - and it is not to be presumed that the ordinary obligation of keeping down interest is increased so as to relieve the remaindermen with respect to the principal, without most distinct language. This consideration is assisted by the following circumstances: - The widow is compelled to keep the premises in repair; she is compelled to elect as to surrendering the allotments previously given to her, or abandoning her gifts under the will; and there is the explicit language "mortgage debt and interest" in connection with the proceeds of the surrendered allotments. This contention, then, I resolve in favour of the respondents as did the learned primary Judge.

Then it is claimed that when the testator speaks of "the rents and profits of the said premises," he includes the corpus of the realty. So the learned Judge has held on the authority of Metcalfe v. Hutchinson[12]; Lord Londesborough v. Somerville[13]; and Heneage v. Lord Andover[14]. No doubt, where an estate is given to any person for the purpose of raising out of the rents and profits a gross sum, it has often been considered the declared purpose dominated the power, and entitled the donor to sell or mortgage the property itself to effectuate the donor's intention. The argument addressed to us has, however, gone to this length. It is contended that by virtue of the principle just adverted to, no matter how limited the estate may be in respect of which the rents and profits are appropriated to the purpose of raising a gross sum, the law presumes that the fee is to be charged. In other words, it is said that the fee is the corpus in every case, notwithstanding the definite limitation of estate, unless some other context exists to cut it down. That is rested largely on the generality of the language in some of the cases.

Jessel M.R. says in Metcalfe v. Hutchinson[15] that, where there is a trust to pay or raise and pay debts out of rents and profits, "that, without more, means that you may raise them by sale or mortgage." He adds: - "I say without more, because you may find in the instrument a context which will overrule that construction, but the great point to bear in mind is that you must find a context to get rid of that construction. It is not that there is a primâ facie construction that rents and profits mean annual rents and profits, but in the case I have put the primâ facie construction is that it means to pay out of corpus."

That is a plain distinct enunciation of the law, it lays down a general rule, which is the same as Sir Thomas Plumer V.C. called in Allan v. Backhouse[16] "a technical rule of construction, not permitting the Court to exercise any judgment." Both those learned Judges, however, go on to show that this general primâ facie rule, which is really artificial, may be modified by the context. The question is: Does it apply to such a case as the present? In the present instance all that the wife gets is an estate during life conditional on widowhood, and this devise is made subject to the direction to pay legacies out of "the rents and profits of the said premises." It is obvious that she cannot pay more than she receives, and the receipts are not indefinite; they cannot be more than co-extensive with the estate she gets in the premises. Nevertheless, say the respondents, the fee is charged. No case has been cited in which it was held that any estate in the land larger than that of which the rents and profits were devoted could be disposed of for the declared purpose.

All the cases cited were, to say the least, consistent with the position urged by Mr. Loxton, that in these circumstances the authorities referred to by the learned primary Judge were inapplicable. This is a fundamental distinction which appeals to me as correct on the face of it. There is, apparently, no judicial utterance opposed to it, and, on the other hand, it is supported by several cases of great authority. The first is Foster v. Smith[17], a decision of Lord Lyndhurst. As that case was afterwards approved by the House of Lords in Torre v. Browne[18], I quote from the latter case. At the page mentioned, Lord Cranworth L.C. said that in Foster v. Smith[19] "a testator devised his estates to trustees, on trust to receive the rents, and thereout to pay to his wife an annuity of £200 for her life, and after her decease, to convey the estates to his three sisters in fee. Lord Lyndhurst held, that after the death of the wife, the sisters were entitled to a conveyance of the property free from any claim on the part of the wife's executors for arrears of her annuity. But," said Lord Cranworth, "the ground on which that decision rested, was that nothing was made liable to the annuity, except the rents which accrued during her life, and so that the estate of the sisters could not be touched."

And then the Lord Chancellor added: that Lord Lyndhurst had in his judgment said expressly, that if the trust had simply been to receive the rents, and thereout pay to the wife an annuity of £200 for her life, this would have been a charge on the rents until the whole amount of the annuity with the arrears had been paid. In that case the rents referred to would have been co-extensive with the fee instead of being, as in the will there dealt with, commensurate only with the life of the widow. In Phillips v. Gutteridge[20] Lord Westbury L.C. was most precise. The Lord Chancellor said: - "An unlimited indefinite charge upon rents and profits is a charge upon the corpus, just as an unlimited indefinite gift of rents and profits is a gift of the corpus." Then he says: - "The trust in this case is in effect out of the rents and profits to pay the testator's daughter £60 a year during her life, not out of the rents and profits during the life of the daughter to pay her the annuity. The right of the trustee to receive the rents and profits is general and indefinite; there is no limitation of time. The charge, therefore, upon the rents and profits is unlimited and continues until the annuity is satisfied." In other words, the annuity was a charge on the corpus - and so the Lord Chancellor said. See also In re Moore's Estate[21].

For these reasons I am compelled to take a different view from that in the judgment appealed from, and to hold that the legacies are not a charge upon the corpus.

The next point raised by the appellants was one argued before the learned primary Judge, but which, in the view he took of the matter just dealt with, it was unnecessary to decide. It now becomes requisite to deal with that point, which is whether the life tenant is bound to apply the rents and profits in the first instance to payment of legacies, so as to leave as much as possible of the "possessed" and "policy" moneys for the liquidation of the mortgage on Lonsdale Terrace. On the principle of the case cited, Scales v. Collins[22], which is one of many, this is correct.

Then the appellant claimed that the income actually received by the widow from the Waverley Road and Wallis Street allotments and applied by her in payment of interest on the Lonsdale Terrace mortgage, ought to have been paid in reduction of principal, leaving the interest to be paid by means of the rent and income of the devised land. As a legal proposition, that appears to be well founded, because it was clearly intended that the rent and income of the devised land, and the money representing the surrendered allotments, should both be applied in reduction of the mortgage debt, the first as to interest only, the second as to interest so far as required and otherwise as to principal. How that legal proposition, or the previous one as to marshalling, may affect the parties practically, we are not in a position to judge - they are matters which may have to be worked out on the accounts. We can do no more now than state the principle to be applied in each case so far as it may prove material.

With regard to Exhibit 8, the indenture of 5th June 1894, an independent argument is raised: - It is said whatever were the rights, or the doubts as to the rights of the parties previously, that document amounted to a definite adjustment of those rights on the basis that the life tenant should assume the burden of paying off the principal mortgage debt as well as interest. I find it impossible so to read the document. A new mortgagee took over the old mortgages, which, except for the substitution of a new creditor, and the correction of an error as to parcels by the later indenture, still stand in full force and effect; the debt and the debtors remain the same. The old contract not being discharged, there is no novation. But the new contract is something additional to the old, and not only consistent with it except, perhaps, as regards the correction referred to; and not only so, the new contract is for the very purpose of securing the rights of the new mortgagee in respect of the moneys owing to him under the transferred original mortgage. The transaction was simple as appears on the face of the documents. The one mortgage had been overdue, and was extended, the other was overdue and was not extended, and payment was pressed for. The property values had fallen in 1894, as is commonly known; and so the proposed new mortgagee stipulated, before agreeing to the transfer and advancing some further small amounts incidental to the transaction, that an error in dimensions should be corrected, with the consent of all parties interested, that the further sums should be secured on the widow's interest on devised lands not already included with the mortgages, and that the widow and her son should enter into a personal covenant securing the payment of the moneys secured by the mortgage, and in view of the diminution in value of the lands, the new mortgagee also stipulated with the trustees that the mortgage debt should, until reduction to £3,000, be further secured by deposit of the deeds of the Balaclava and Mount Drewitt lands This was done by Exhibit No. 10. The technical objection that only one executor, instead of two, signed that document was not pressed, and is immaterial. The only possible ground for questioning the transaction is the fact of the extension of Molle's mortgage to April 1896, and it was suggested that no reason for giving Exhibit No. 10 in June 1894 was shown.

That, however, is a question of fact which was not in contest previously, on which other evidence might have been adduced. Therefore, we are not in a position to deal with the matter on that ground; and so, dealing with this branch of the case on the basis upon which it was fought, I see no reason for disturbing the conclusion at which the learned primary Judge arrived.

That leaves one subject more to be considered, namely, the declaration in the judgment as to recoupment of Frances Lowther in respect of the mortgage debt of £515 17s. 4d. which the society deducted. Her beneficial interest in those moneys is given after payment of legacies and the Lonsdale Terrace mortgage, but not subject to payment of the society's mortgage. Knight v. Davis[23] therefore applies, and the specific legatee is entitled to exoneration out of the general assets - that is, residuary estate. And so it has been declared. But there has been added a declaration that the devisees are bound to exonerate the specific legatee, and that the necessary sum should be raised out of their property.

This is objected to by the appellants, on the ground that a specific legatee of property charged by the testator in his lifetime with the payment of a sum of money must, as between himself and other specific legatees and devisees, bear the burden himself, and cannot compel them to share his disappointment. As a general rule this is undoubtedly so; but here there is a general direction on the threshold of the will to pay just debts, and the question is whether that makes any difference. The appellants say it does not, and rely on In re Butler; Le Bas v. Herbert[24], which certainly supports their contention. The respondents admit the applicability of the case, but deny its correctness on this point. It is an extremely important question of wide application, and needs to be carefully considered. In re Butler[25] is the only case in which the opinion relied on is found, and it is necessary to examine the groundwork of the matter. Kekewich J. puts it as a question of intention, and that is a correct test. In Middleton v. Middleton[26] the Master of the Rolls, after mentioning the cases upon which In re Butler[27] was determined, says: - "The devisees and legatees are all equally objects of the testator's bounty, and one cannot be permitted wholly or partially to defeat the gift to another, by reason of any rule of law, which makes the property so given to that other legatee previously liable to pay the debts of the testator. These are only instances of giving effect to the intention of the testator found in the words he has used." And see Rickard v. Barrett[28]. The question then is: What is the meaning, and what is the effect of the testator's express direction to pay all just debts? First of all, it means all debts whenever and wherever contracted: Maxwell v. Maxwell[29] per Lord Hatherley, and[30] per Lord Westbury, who added that the obligation lies on those who contend for a limitation of the comprehensive meaning of the words. Of course, the debts are those for which the testator is then liable: O'Connor v. Haslam[31]. Then it means, as Sir Richard Arden M.R. said in Shallcross v. Finden[32], "that until his debts are paid, he gives nothing; that everything he has shall be subject to his debts." And the learned Judge adds: - "I am very clearly of opinion, that wherever a testator says, he wills, that his debts shall be paid, that will ride over every disposition, either as against his heir at law, or devisee." Again, in Rickard v. Barrett[33], a case of marshalling where the will contained the words, "subject nevertheless to the payment of my just debts," Page Wood V.C. said: - "He clearly charges all his real estate before it reaches the hands of his wife." And he adds: - "The plain intention here is, that the property shall not pass to the devisees until the debts are paid." Other authorities which establish that such a direction as is found in this will is a charge on the property are: Conron v. Conron[34]; In re Salt; Brothwood v. Keeling[35]; In re Roberts; Roberts v. Roberts[36]. And the ground of certain decisions in Chancery was, as Jessel M.R. said in In re Newmarch; Newmarch v. Storr[37], "that just debts was a known term, and that it included mortgage debts." So that it is manifest that the direction to pay just debts is a charge on all the assets in respect of all debts including the mortgage debt to the society secured on the policy.

And what is always to be borne in mind is that it is the express direction of the testator, and cannot be treated as unmeaning surplusage, or as a simple truism, which the law itself would have satisfied had nothing been said. In a will nothing is to be rejected as surplusage if it can be avoided: Per Shadwell V.C. in Dover v. Gregory[38]. This principle was given effect to in In re Kempster; Kempster v. Kempster[39], and in that view the direction affects the interpretation of the will, as to the testator's bounty as well as to his obligations to creditors. Kekewich J., in Butler's Case[40], thinks this charge is subject to the dispositions of the will; but Sir Richard Arden thought the dispositions were subject to the charge. And the turning point of the matter is which of these opinions is correct. Sir John Leach, in Irvin v. Ironmonger[41], assumes Sir Richard Arden's view is right.

The general constructive charge, of course, does not exclude marshalling unless the testator so declares. It is impossible to imagine, for instance, that unbequeathed or residuary personalty are to be placed in the same plane with specific gifts by mere force of the direction to pay debts. See per Romer J. in In re Smith; Smith v. Smith[42], and Kekewich J. in In re Kempster; Kempster v. Kempster[43]. The classes are still distinct.

Nevertheless, this question cannot be resolved by confining the attention to marshalling.

Marshalling regulates the order of different classes of assets, and does not operate between assets of the same class. As between the latter the question is, properly speaking, one of contribution, and if that be borne in mind it supplies the answer to the problem we are considering.

A few words of Knight Bruce V.C., in Tombs v. Roch[44] are instructive: -

Contribution, ... if it differs from marshalling, does so in species rather than generically, in form rather than in nature.

Marshalling and contribution are, each of them, the adjustment between several persons of their rights respectively, inter se, in respect of a charge or claim, which, affecting all of them, or properties belonging to all of them respectively, has been or may be enforced in a manner not unjust, as far as the person is concerned by whom it was or may be enforced, but not just as between the persons or properties liable.

Then his Honor says that the properties given by the will are liable, that is, every part of them is liable, to the debts remaining unsatisfied, and he adds there must be some rule or principle according to which, as between the specific legatees and the devisees, that charge or claim must, by apportionment or otherwise, be borne - a rule or principle by which creditors are not bound. He next inquires what that rule or principle is, and says that it must be found in the rights of the parties as intended by the testator. That is the sole guide and having found that there was no intention of throwing the burden of specialty debts on the specifically given personalty, he made the devised realty contribute. Unless a debt, because it happens to be secured on a particular asset, is to be excluded, no distinction can be made in the present instance.

Having then arrived at the position that the specific gifts are charged with the payment of all debts however secured, they all come within the fourth class in the order of marshalling for payment of debts with a view to distribution.

But being there, then comes into play the doctrine of equality. If the earlier classes were able to sustain the burden, let them; if not, this class must share it, and share it proportionately. To that extent the principle of separateness and the independence, if I may so call it, of the specific gifts inter se is qualified. In aequali jure the law requires equality; one shall not bear the burthen in ease of the rest: Dering v. Lord Winchelsea[45]. Accordingly, in the case of debts which were without means of payment except by resort to specific legacies, Lord Langdale M.R. declared that these legacies should undergo a reduction by contribution to the payment of debts and costs: Conolly v. Farrell[46]. And so fully was the doctrine applied in the same case at a later stage[47], that when one of these specific legatees became insolvent and by his non-payment the fund became insufficient, a further contribution among the rest was ordered to supply the deficiency. It is therefore impossible to regard the specific gifts as completely independent when there is a general direction to pay debts charging the whole estate, and so I am of opinion Mr. Innes has made good his position with regard to In re Butler[48]. The portion of that case relating to the effect of the constructive charge for debts cannot be considered sound law.

I agree with the form of declaration proposed by my learned brother Barton.

Order that the decree be varied in the following respects: - (1) Declare that the bequest in trust to the defendant Frances Lowther of the moneys, stock and funds of which the testator should die possessed and the policy moneys is a specific and not a residuary bequest. (2) Declare that the annual rents, profits and income of the real estate devised by the testator to the said defendant for her life are to be deemed as between the parties to be charged in the first instance with the payment of the pecuniary legacies. (3) Declare that the direction to the said defendant to pay legacies out of rents and profits does not by implication vest the fee in her. (4) The declaration as to recoupment of the defendant Frances Lowther out of the general assets to the extent of the mortgage debt secured on the policy moneys to be varied by substituting for the last clause thereof a declaration that, so far as the general assets are insufficient for that purpose, the real estates devised by the said will and the specific bequests therein mentioned ought to contribute rateably to make good the deficiency according to their respective values at the death of the testator, and direct that for such purpose a value be set on the real estates and bequests respectively and that the proportion attributable to the real estates be raised and paid out of the said real estates or a sufficient part thereof. Decree as varied affirmed. Costs of plaintiffs and of defendant Frances Lowther in respect of the appeal to be paid out of the estate.

On the motion of Clive Teece for the appellants and the infant respondents, the order above set out was amended as follows: -

Declare that the respondent Frances Lowther was by the terms of the will entitled to apply the annual rents and profits of the allotments fronting Waverley Road and Wallis Street in payment of the interest on the mortgage debt over Lonsdale Terrace only so far as the annual rents and profits of the lands devised to the respondent Frances Lowther during her widowhood were insufficient to pay the said interest, but that except as aforesaid the respondents Frances Lowther and John Booth were bound under the terms of the said will to apply the annual rents and profits of the said allotments of land in discharge of the principal of the mortgage debt secured on the said Lonsdale Terrace. Costs of the infant respondents to be paid out of the estate.

Solicitors, for the respondents, Stephen, Jaques & Stephen; Read & Read; Morgan J. O'Neill.

[4] 20 Ch. D., 676, at pp. 681, 682.

[8] [1859] EngR 897; 7 H.L.C., 689, at p. 703.

[10] [1912] HCA 36; 14 C.L.R., 86, at p. 107.

[11] L.R. 16 Eq., 475; 42 L.J. Ch., 824.

[13] [1854] EngR 514; 19 Beav., 295.

[18] [1855] EngR 718; 5 H.L.C., 555, at p. 577.

[20] 3 D. J. & S., 332, at p. 336.

[21] 19 L.R. Ir., 365, at p. 367.

[22] [1852] EngR 330; 9 Ha., 656.

[26] [1852] EngR 430; 15 Beav., 450, at p. 454.

[29] L.R. 4 H.L., 506, at p. 514.

[30] L.R. 4 H.L., 506, at p. 517.

[31] [1855] EngR 312; 5 H.L.C., 170, at p. 178.

[34] [1858] EngR 1051; 7 H.L.C., 168, at p. 183.

[35] (1895) 2 Ch., 203, at p. 204.

[38] [1839] EngR 1210; 10 Sim., 393, at p. 399.

[44] 2 Coll., 490, at pp. 499, 500.

[45] 2 Wh. & T. L.C., 7th ed., 535, at p. 538.

[46] [1845] EngR 585; 8 Beav., 347.

[47] [1846] EngR 1129; 10 Beav., 142.