Coulls v Bagot's Executor and Trustee Co Ltd

(1967) 119 CLR 460

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(Judgment by: Taylor J, Owen J)

Between: Coulls
And: Bagot's Executor and Trustee Co Ltd

Court:

Judges: Barwick CJ
McTiernan J

Taylor JWindeyer J

Owen J

Subject References:
Contract
Indemnity and Contribution
Equity

Hearing date: Adelaide, 29 and 30 September 1966
Judgment date: 21 March 1967

Sydney

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Judgment by:
Taylor J
Owen J

1. These four appeals were heard together and it is convenient to dispose of them in the same way. (at p484)

2. Leopold Perrin Coulls v. Bagot's Executor and Trustee Co. Ltd., O'Neil Construction Pty. Ltd. and Doris Sophia Coulls. (at p484)

3. The appellant was one of the defendants to proceedings commenced by way of originating summons for the determination of certain questions relating to the construction of an agreement in writing said to have been made in January 1959 between Arthur Leopold Coulls, deceased (the testator) in his lifetime and O'Neil Construction Pty. Ltd. (the company). The plaintiff in the proceedings was the respondent Bagot's Executor and Trustee Co. Ltd. (the trustee) and the defendants, other than the present appellant, were the company and the respondent Doris Sophia Coulls who was the widow of the deceased. We have said that the agreement was made between the testator and the company but there is a question whether the lastnamed respondent was also a party. (at p484)

4. In his lifetime the testator was the owner of a substantial portion of land in South Australia and the questions arise with respect to an agreement which purported to give to the company the sole right to quarry and remove stone from a portion of it. The agreement in question is in the following terms:

"Agreement between Arthur Leopold Coulls and O'Neil Construction Proprietary Limited.

In consideration of the sum of 5 pounds, I Arthur Leopold Coulls, Anstey's Hill, Highbury East, give to O'Neil Construction Proprietary Ltd. the sole right to quarry and remove stone from an area of approximately 50 acres (fifty acres) situated around blue dolomite hill near homestead of original Newman's Nursery. The approximate 50 acres is detailed in attached map.

I also agree to grant a permanent right of way along the original Council road of 'Watergully' to Perseverance Road.

O'Neil Construction Proprietary Ltd. agrees to pay at the rate of 3d. per ton for all stone quarried and sold, also a fixed minimum royalty of 12 pounds per week for a period of ten (10) years with an option of another ten (10) years at above basis (12 pounds per week minimum).

I also agree to extend this period for another ten (10) years at 4d. per ton royalty with a minimum royalty of 12 pounds per week as above.

I authorise the above Company to pay all money connected with this agreement to my wife Doris Sophia Coulls and myself, Arthur Leopold Coulls as joint tenants (or tenants-in-common?) (the one which goes to living partner).

This agreement is effective from July 1st 1959

A. L. Coulls L. O'Neil D. S. Coulls."

Some eighteen months after the making of the agreement the testator died and questions arose whether the trustee or the testator's widow were entitled to the royalties which accrued after his death. In particular the following questions were raised by the originating summons:

"1.

Is O'Neil Construction Pty. Ltd. entitled or bound to pay the royalties payable under the said agreement to the applicant, Bagot's Executor and Trustee Co. Ltd.?

2.

Is O'Neil Construction Pty. Ltd. entitled or bound to pay the said royalties to Doris Sophia Coulls, the deceased's widow?

3.

If the said royalties are paid to the applicant, does it receive and hold the royalties as executor or trustee of the deceased's estate or for and on behalf of the said widow or for the widow and the deceased's estate jointly or in common?

4.

Is the said widow the assignee of the said royalties and is she entitled to demand that payment of them be made to her and to hold them as her own?"

These questions were not precisely answered by the learned judge of first instance but he disposed of the originating summons by making the following declarations:

"1.

The defendant O'Neil Construction Pty. Ltd. is not entitled or bound to pay the royalties payable under the said agreement to the plaintiff.

2.

The defendant O'Neil Construction Pty. Ltd. is entitled and bound to pay the said royalties to the defendant Doris Sophia Coulls.

3.

The defendant Doris Sophia Coulls is the lawful assignee of the said royalties and is entitled to demand that payment of them be made to her and to hold them as her own." (at p485)

5. It was argued in the court below that the wife of the testator was a party to the contract and, alternatively, that the last paragraph of the contract operated as an equitable assignment to her of the royalties payable thereunder after the death of her husband. For our part we are quite unable to see how the last paragraph of the agreement can operate as an equitable assignment having regard both to its terms and to the fact that, even if its terms had not precluded this result, it was not supported by consideration. If, however, the correct conclusion is that the widow was a party to the contract it is, to our minds, clear that she is entitled to receive the royalties payable after her husband's death notwithstanding that she, personally, gave no consideration for the company's promise. We do not accept the contention advanced on behalf of the appellant that if one, only, of two joint promisees provides the consideration for a promisor's promise the other promisee cannot, in any circumstances, sue to recover moneys payable according to the promise. Indeed it is apparent that in such circumstances at common law an action to recover must have been brought by both promisees and that it would fail if brought by one alone. Further it is established that on the death of one of such joint promisees the right of action against the debtor vests at common law in the survivor though of course this does not necessarily determine the ultimate rights, inter se, of the the survivor and of the estate of the deceased promisee (Martin v. Crompe (1698) 1 Ld Raym 340 (91 ER 1123) ; Anderson v. Martindale (1801) 1 East 497 (102 ER 191) ; and Jell v. Douglas (1821) 4 B & Ald 374 (106 ER 974) ). The question to be determined, then, is whether the testator's wife was a party to the contract and whether, upon its true construction, the contract contains a promise by the company to pay to her the royalties falling due under the contract after the testator's death. (at p486)

6. We observe first of all that there is nothing whatever in the contract apart from the last paragraph upon which a conclusion could be based that she was a party to the contract. On the contrary the contract purports expressly to be one made between Arthur Leopold Coulls and O'Neil Construction Pty. Ltd. It is the testator alone who engaged to give to the company the sole right to quarry and remove stone from the land described, to grant a "permanent right of way" along the original council road of "Watergully" to Perseverance Road and to extend the initial "period" of ten years for another ten years. On its part the company agrees with the testator to pay royalties at the rates specified. But it is said that the only promise to pay royalties made by the company is that contained in the last paragraph and that this is a promise to pay "all money connected with this agreement" to the testator and his wife jointly during their lives and, after the death of one of them, to the survivor. In our view, however, this is not the effect of that paragraph ; there was no express promise by the company to pay royalties to the wife nor is it possible to imply such a promise. One cannot doubt, of course, that the testator intended that the royalties should be paid to his wife after his death if she should survive him but it seems to us that the method which he chose to carry this intention into effect miscarried in spite of the fact that his wife's signature appears at the foot of the contract following those of the testator and L. O'Neil for the company. The evidence showed that the contract had been written out by the testator's wife at his request and it may have been thought that the effect of the last paragraph was to make her a party and that therefore her signature was necessary. But the mere fact that her signature appears does not make her a party ; this is a question to be resolved upon a consideration of the written instrument itself.

It seems to us that the terms of the last paragraph do not prescribe the persons who are to be entitled to demand and receive the royalties payable under the agreement and, therefore, do not negative the certain implication which would otherwise arise that it was the testator who was to be so entitled. On what other basis could the husband, alone, "authorise" the survivor to receive them after the death of either himself or his wife? It is, of course, obvious that in the preparation of this informal agreement the persons concerned contemplated, and provided for, the contingency of the death of the testator or his wife during its currency and it is not without significance that, whereas the testator authorized his wife to receive the royalties payable after his death, there is no corresponding authorization by the wife in the event of her husband surviving her. We think it is clear that the only person entitled to demand royalties under the contract was the testator and that his wife was not a party to it. Accordingly we are of the opinion that, since the last paragraph cannot operate as an equitable assignment, the authority which that paragraph gave came to an end on the testator's death. We may say that we come to this conclusion with some regret since it operates to defeat what must, in the circumstances, be presumed to have been the manifest intention of the testator. In our opinion the appeal should be allowed and the questions asked answered:

(1)

Yes.

(2)

No.

(3)

As executor of the deceased's estate.

(4)

No. (at p487)

7. Bagot's Executor and Trustee Co. Ltd. v. Doris Sophia Coulls (2 Appeals). (at p488)

8. These are appeals from third party proceedings in the Supreme Court in which the executor of the will of the testator sought to recover from the testator's widow two separate sums of money as and for indemnities in respect of moneys paid after the death of the testator in discharge of two mortgages over a house property near Adelaide. The property was bought at auction and title was taken in the joint names of the testator and his wife. The mortgages in question were given on 4th May 1960 by the testator and his wife jointly and were for the amounts respectively of 10,300 pounds and 3,800 pounds, the proceeds being applied in payment of the purchase money for the property. The purchase price was 21,200 pounds and the balance of the purchase money was paid by the testator out of his own funds. There is, of course, no doubt that both the executor of the will and the wife of the testator were as between the mortgagees and themselves, bound to repay the principal moneys. But whether a right to an indemnity or to a contribution accrues to one of two joint mortgagors upon repayment of the principal sum by one of them depends upon the implication of a contractual obligation or arises in some other way In re a Debtor (1937) 1 Ch 156 ; Re Salisbury-Jones [1938] 3 All ER 459 ; and Anson v. Anson [1953] 1 QB 636 it seems that no such right will arise where such a result would clearly be contrary to the intentions of the parties at the time when the joint obligation was undertaken (Dunbar v. Dunbar (1909) 2 Ch 639, at p 646).

In the present case there is evidence, which the learned judge of first instance appears to have accepted without question - and which there is no reason to doubt - that the house was bought by the testator expressly as a new and "better" home for himself and his wife during their joint lives, that he had planned to sell the "Highbury East house" to finance the purchase, that, having failed in this, he had sought an overdraft from his bankers, that on the completion of the contract he gave his own cheque for the deposit and that the two mortgages in question were given in order, temporarily, to enable him to complete the purchase and, further, that at the time of the purchase he announced, in effect, that he was buying the home for his wife. In these circumstances we can see no grounds upon which it can be asserted that the appellant is on any basis entitled either to contribution or a complete indemnity from the respondent. (at p488)

9. Doris Sophia Coulls v. Bagot's Executor and Trustee Co. Ltd., Leopold Perrin Coulls and Evelyn Hazel Lange. (at p489)

10. This is an appeal from an order dismissing an application by the appellant made under the provisions of the Testator's Family Maintenance Act, 1918-1943. We were informed that in the event of the Court dismissing the three appeals with which we have already dealt the appellant would not wish to proceed with this appeal. However, having regard to the fact that we are of the opinion that the appeal with respect to the royalties payable under the contract of January 1959 should be allowed and that the destination of the royalties under that agreement was a vital consideration upon the hearing of this application, the order of dismissal should be set aside and the application remitted for a fresh hearing. (at p489)