[1974] 2 All ER 280

Fountain Forestry Ltd v Edwards and another

CHANCERY DIVISION

BRIGHTMAN J


21, 22, 23 NOVEMBER, 13 DECEMBER 1973



Executor and administrator - Dealings with assets of estate - Power of one of two or more personal representatives to bind estate - Contract to sell asset - Contract made by one administrator - Contract expressed to be between purchaser and both administrators - Administrator signing on behalf of himself and as agent for other administrator - Other administrator ignorant of contract - Whether contract binding on estate.

Executor and administrator - Dealings with assets of estate - Real property - Administrators - Power of one of two or more administrators to deal with real property - Contract by one of two administrators to sell real property - Whether contract binding on estate - Administration of Estates Act 1925, s 2.

At the time of his death the deceased was the owner of certain freehold property. He died intestate and letters of administration were granted to his widow and son. The plaintiffs negotiated with the son for the purchase of the property and a contract was signed which was expressed to be made between the son and widow of the one part and the plaintiffs of the other, whereby the son and widow agreed to sell and the plaintiffs to purchase the property. The son was expressed to sign the contract 'for self and [the widow]'. In fact the son had not consulted the widow prior to the signing of the contract and she had not expressly ratified the contract since. The widow proved reluctant to execute an engrossment of the contract and the plaintiffs brought proceedings for specific performance contending that the contract was binding on the deceased's estate since one of two or more personal representatives was entitled to enter into a contract for the sale of an asset so as to bind the estate without the consent of the other personal representative or representatives.

Held - On the assumption that, by virtue of s 2^a of the Administration of Estates Act 1925, one of two executors had power to enter into a contract binding on the deceased's estate to sell freehold land, and that an administrator had the same power of disposition as an executor, nonetheless the plaintiffs were not entitled to specific performance, since the son had not bound himself to sell the property without the concurrence of the widow but had bound the estate on the assumption, which he warranted to be correct, that he had authority to sign as agent for her. That assumption having been

^a     Section 2, so far as material, is set out at p 283 f and g, post

[1974] 2 All ER 280 at 281

falsified there was no contract to be enforced; all that could be sued on was the warranty of authority given by the son (see p 283 h, p 285 f and g and p 287 a to c, post).

Sneesby v Thorne (1855) 7 De GM & G 399 applied.

Notes

For the power of personal representatives to deal with the estate, see 16 Halsbury's Laws (3rd Edn) 357-366, paras 691-706, and for cases on the subject, see 24 Digest (Repl) 618-639, 6138-6303.

For the Administration of Estates Act 1925, s 2, see 13 Halsbury's Statutes (3rd Edn) 40.

Cases referred to in judgment

Anon (1536) 1 Dyer 23b, 73 ER 49, 24 Digest (Repl) 619, 6141.

Herbert v Pigott (1834) 2 Cr & M 384, 4 Tyr 285, 2 Dowl PC 392, 3 LJEx 79, 149 ER 809.

Hudson v Hudson (1737) 1 Atk 460, West temp Hard 155, 26 ER 292, LC, 24 Digest (Repl) 667, 6552.

Jacomb v Harwood (1751) 2 Ves Sen 265, 28 ER 172, 24 Digest (Repl) 619, 6142.

Simpson v Gutteridge (1816) 1 Madd 609, 56 ER 224, 24 Digest (Repl) 619, 6143.

Smith v Everett (1859) 29 LJCh 236, 27 Beav 446, 34 LTOS 58, 5 Jur NS 1332, 54 ER 175, 24 Digest (Repl) 640, 6316.

Sneesby v Thorne (1855) 3 Eq Rep 662, 25 LTOS 125, 1 Jur NS 536, 44 Digest (Repl) 48, 333; affd on other grounds (1885) 7 De GM & G 399, 3 Eq Rep 849, 25 LTOS 250, 1 Jur NS 1058, 44 ER 156, LJJ, 24 Digest (Repl) 619, 6144.

Stanley v Bernes (1828) 1 Hag Ecc 221, 162 ER 564, 23 Digest (Repl) 226, 2714.

Turner v Hardey (1842) 9 M & W 770, 1 Dowl NS 954, 11 LJEx 277, 152 ER 326, 24 Digest (Repl) 785, 7750.

Warwick (Earl of) v Greville (1809) 1 Phillim 123, 161 ER 934, 23 Digest (Repl) 144, 1503.

Willand v Fenn (circa 1743) cited 2Ves Sen at 267, 28 ER 173, 24 Digest (Repl) 619, 6147.

Cases also cited

Beswick v Beswick [1967] 2 All ER 1197, [1968] AC 58, HL.

Godwin v Francis (1870) LR 5 CP 295.

Ingham, Re, Jones v Ingham [1893] 1 Ch 352.

Johnson v Clarke [1928] Ch 847.

Trollope's Will Trusts, Re, Public Trustee v Trollope [1927] 1 Ch 596, [1927] All ER Rep 365.

Warner v Sampson [1958] 1 All ER 44, [1958] 1 QB 404.

Summons

By a writ issued on 26 January 1973 the plaintiff company, Fountain Forestry Ltd, brought an action against Robert Ieuan Edwards and Mary Jones Edwards, the personal representatives of Hugh Robert Edwards, deceased, claiming specific performance of a contract for the sale of certain land. By a summons issued on 9 May the plaintiff company applied for summary judgment. The facts are set out in the judgment.

John Mummery for the plaintiff company.

Patrick Talbot for the defendants.

Cur adv vult

13 December 1973. The following judgment was delivered.



BRIGHTMAN J

read the following judgment. This is a summons under RSC Ord 86 for a summary order for specific performance of a contract for the sale of land.

[1974] 2 All ER 280 at 282

On 6 May 1965 Hugh Robert Edwards died. He was at his death the owner in fee simple of 107 acres of mountain land and sheep-walk in the county of Montgomery, to which I shall refer as 'the second property' since it is the land secondly described in the agreement sought to be enforced. The deceased died intestate and letters of administration were granted to his widow, Mary Jones Edwards, whom I shall call 'the widow', and his son, Robert Ieuan Edwards, whom I shall call 'the son'. The son was the owner in his own right, in fee simple, of an adjoining area of mountain land and sheep-walk of similar acreage to which I will refer as 'the first property'.

The plaintiff company, Fountain Forestry Ltd, negotiated with the son for the purchase of the first and second properties. On 25 February 1971 a contract was signed. The contract is expressed to be made between the son and the widow of the one part and the plaintiff company of the other part. Thereby the son and the widow agreed to sell and the plaintiff company to purchase the first and second properties at the price of £5,992. The son was expressed to sign the contract 'for self and Mary Jones Edwards'. The son and the widow are the defendants to this action.

Prior to the signing of the contract it was agreed by correspondence that the son was selling the first property as beneficial owner and that the widow and the son were selling the second property as personal representatives of the deceased. The purchase price was apportioned as to £3,000 to the first property and £2,992 to the second property.

On 15 March 1971 the plaintiff company's solicitors submitted a draft conveyance to the defendants' solicitors. This was returned approved on 2 April and on 19 April the plaintiff company's solicitors submitted an engrossment of the conveyance for execution by the defendants. Many letters passed. Finally on 26 January 1972 it became apparent that the engrossment had not been returned executed by the defendants because the widow was reluctant to execute it. On 26 January 1973 a writ was issued by the plaintiff company for specific performance of the agreement and on 9 May a summons was issued under RSC Ord 86.

According to the affidavit evidence of the widow and the son, the son did not in fact consult the widow prior to the signing of the contract and the contract has not been expressly ratified by her since. I must accept these facts as correct for the purposes of the summons but if the action comes to trial it is, of course, possible that the position will be shown to be quite otherwise.

Counsel for the plaintiff company submitted that where there are two or more personal representatives, any one of them is entitled to enter into a contract for the sale of an asset so as to bind the estate of the deceased without the concurrence of the other personal representative or representatives, and that therefore the contract in the present case is binding on the deceased's estate, notwithstanding that the widow did not sign it and did not authorise the son to sign on her behalf. Counsel for the defendants submitted first that, although that may be the law in the case of executors, it is not the law in the case of administrators since they are bound to act jointly. But, even if it is the law in the case of administrators, it does not apply to the present case because the son erroneously believed he had, or would receive, the authority of the widow, whereas in fact he did not have that authority and could not get it. In those circumstances, submitted counsel, the court will not decree specific performance. In support of the second proposition counsel relied on Sneesby v Thorne to which I shall have to refer in detail later.

I deal first with the submission that one administrator has power to bind the estate of the deceased without the concurrence of his co-administrator. On this aspect of the case I have had able arguments from counsel on both sides which have been the product of considerable research undertaken by them. As early as 1536 it was held^b that one of two executors could make a valid disposition of the entire

^b     See Anon 1 Dyer 23b

[1974] 2 All ER 280 at 283

interest in a term of years which had been vested in the deceased, without the concurrence of his co-executor. There are numerous later cases to the like effect. In 1751 Strange MR said^c:

^c     Jacomb v Harwood 2 Ves Sen 265 at 267

'Nothing is clearer than this, and I never knew it questioned in the case of executors, that each executor has the entire control of the personal estate of [the] testator, may release, or pay a debt, or transfer any part of [the] testator's property, without [the] concurrence of the other executor.'

In 1816 Plumer V-C said^d: '... a Gift, Sale, Surrender, Payment, Release, or Judgment confessed by one Executor, is as effectual as if all of them had joined.' The point could not, I think, have arisen before 1898 in relation to freeholds since these vested in the devisee or heir-at-law and not in the executors unless also devisees.

^d     Simpson v Gutteridge 1 Madd 609 at 616

Until 1898, therefore, I am satisfied that it was competent for one of two executors to sell or contract to sell an asset forming part of the personal estate of the deceased at his death, although probably it would not have been competent for a single executor to have varied the terms of a contract for sale which both executors had previously made: compare Turner v Hardey.

Section 2(2) of the Land Transfer Act 1897 provided that the powers, rights, duties, and liabilities of personal representatives, in respect of personal estate, should apply to real estate as if that real estate were a chattel real vested in them. If the subsection had stopped there, one of two executors would have been able to contract to sell and to convey the deceased's real estate. But a proviso to the subsection said that it should not be lawful for some or one only of joint personal representatives, without the authority of the court, to sell or transfer real estate. In that Act real estate does not include leaseholds. In the result, between 1898 and 1925, one of two executors could contract to sell and could convey leaseholds and pure personalty but could not contract to sell or convey freehold land.

Section 2(1) of the Administration of Estates Act 1925, which replaced with amendments s 2(1) and (2) of the 1897 Act provides:

'... all powers, duties, rights, equities, obligations, and liabilities of a personal representative in force at the commencement of this Act with respect to chattels real, shall apply and attach to the personal representative and shall have effect with respect to real estate vested in him ... '

save that s 2(2) of the 1925 Act does not permit one of two or more personal representatives to convey real estate 'without the concurrence therein of all such representatives or an order of the court ... ' There are two departures from the 1897 Act. Under s 3, 'real estate' includes leaseholds; and, as I have indicated, the restriction in s 2(2) is expressed only to apply to a conveyance; the wording in s 2(2) of the 1897 Act was 'sell or transfer'. It seems to me that the likely effect of the 1925 Act is, and for the purposes of this judgment I am prepared to assume, that one of two executors is now able to enter into a contract binding on a deceased's estate to sell freehold as well as leasehold land and pure personalty belonging to the deceased at his death, although he cannot implement that contract in relation to freeholds without the concurrence of his co-executor or co-executors or a court order.

I turn to the difficult question whether administrators are in the same position as executors. In 1737 Lord Hardwicke LC decided Hudson v Hudson. On the death of John Hudson intestate letters of administration were granted to Benjamin Hudson

[1974] 2 All ER 280 at 284

senior and William Hudson. The administrators appointed Benjamin Hudson junior and Joseph Hudson to be their attorneys for the purpose of getting in certain assets. William, as administrator, without the concurrence of his co-administrator, settled accounts with the attorneys and granted them a general release. William thereafter died. In a suit by Benjamin senior, the surviving administrator, against the attorneys for an account, the attorneys relied on the accounts settled with William and the release which he had granted. Lord Hardwicke LC said ((1737) 1 Atk at 460):

'... I am of opinion that one administrator cannot release a debt, or convey an interest, so as to bind the other, and that the case of an administrator differs from that of an executor.'

This observation was, in strictness, obiter, because Lord Hardwicke LC went on to decide first, that the attorneys were accountable to the administrators in their personal capacity and not in their representative capacity and that therefore a release by one principal was sufficient, as in the case of joint creditors; secondly, that the release was unfair and collusive and ought to be set aside in equity.

In Jacomb v Harwood, to which I have already referred, Strange MR mentioned with approval an unreported case, Willand v Fenn (Unreported; cited 2 Ves Sen at 267), decided in the Court of King's Bench in 1738 or a little later, where Hudson v Hudson was not followed, and it was held, after apparently much protracted argument, that there was no distinction in this respect between executors and administrators. The reference to the case is extremely brief. A footnote in Selwyn's Nisi Prius^e suggests that Willand v Fenn (Unreported; cited 2 Ves Sen at 267) may perhaps not have proceeded in quite the manner recounted by Strange MR. The authority of Willand v Fenn (Unreported; cited 2 Ves Sen at 267) is, I think, limited.

^e     13th Edn, 1869, p 692, footnote (v)

The next two cases on this topic to which I was referred were decisions of Sir John Nicholl in the Prerogative Court in 1809 and 1828. In Warwick v Greville there were competing claims to the administration of an intestate's estate on the part of Lord Warwick, his brother, his sister and the son of a deceased sister. The decision to whom the grant should be given rested with the discretion of the court. In decreeing administration to the younger brother, Sir John Nicholl said (1 Phillim at 126):

'Assuming, however, that Lord Warwick and his sister did unite in praying for a joint administration, the interests indeed would be even, but it would be an application for a joint, opposed to an application for a sole, administration. It has been correctly stated that the Court never forces a joint administration because, if the administrators were at variance, it almost put an end to the administration. Further, the Court prefers ceteris paribus a sole to a joint administration, because it is infinitely better for the estate; administrators must join and be joined in every act, which would not only be inconvenient to themselves, but, what is of more consequence, must be inconvenient to those who have demands on the estate either as creditor or as entitled in distribution.'

In Stanley v Bernes, on an application for administration pendente lite, limited to the recovery of debts amounting to £14,800, the two administrators sought leave to

[1974] 2 All ER 280 at 285

enter into separate administration bonds each for half £14,800 instead of a joint bond for the whole. This proposal did not appeal to Sir John Nicholl who said ((1828) 1 Hag Ecc at 221, 222):

'The prayer that the administrators may give separate bonds is quite a novel application--I can see no necessity for it, nor would any advantage result, because administrators must always act jointly; they cannot, like executors, act independently.'

Finally, I come to Smith v Everett. This was a decision of Romilly MR in 1859. William Smith and Everett were partners in a country bank. Smith died. Probate of his will was granted to his widow and two others. Everett settled accounts with the widow's co-executors but the widow herself was not a party to such settlement. The widow then instituted a suit to establish the right of the estate to a moiety of the goodwill and profits of the banking business notwithstanding the settled accounts. Everett relied on the accounts which he had settled with the plaintiff's co-executors. Romilly MR said (29 LJCh at 239, 240):

'It is a settled principle with respect to executors, that any two may settle an account; in fact, one may settle an account, and it binds the others, though it may be a question as between co-executors whether they are liable to each other, or whether they are liable to their cestuis que trust for acting improperly. In Herbert v. Pigott two out of four executors brought an action in respect of the testator's estate; the other two executors released the debt: it was held to be binding on those bringing the action. There was, then, a question whether the same principle extended to administrators, and later authorities have held that it does; still there is no question that executors have that power.'

Counsel have shown me that there is a report (27 Beav 446 at 454) of this case which omits the vital words 'and later authorities have held that it does', but they appear in a third report (34 LTOS 58 at 59). The remark about administrators was, of course, obiter.

It appears to me that there is no decisive authority which answers the question whether one administrator, acting without his co-administrator, has the same power of disposition as an executor acting without the concurrence of his co-executor. But having regard to the statement of Romilly MR that the question was settled by 1859 in favour of the administrator who acts alone, I am content to assume for present purposes that the view which he expressed was a correct interpretation of the law with the result that an administrator has power, at the present day, to bind the intestate's estate by his own act without the concurrence of his co-administrator.

I turn therefore, on the basis of that assumption, to the second defence. This, as I have said, is founded on Sneesby v Thorne to the effect that specific performance ought not to be decreed since the contract was based on the supposition that the widow, as co-administrator, concurred. In the Sneesby case the testator died in 1845. His will was proved by his executors, Thorne and Smith. The executors had retained certain leasehold properties in their hands unsold. In 1851 Thorne, who was about to set off for a journey abroad, received a communication from Smith to the effect that he proposed to sublease the property. Thorne objected and advocated a sale with vacant possession. In April 1852 Smith made an attempt at a sale which was unsuccessful. Thorne, when he learned of this, expressed his satisfaction because he considered

[1974] 2 All ER 280 at 286

that the proposed price was too low. However, Smith pressed ahead, and on 18 August 1852 an agreement was expressed to be made between Thorne and Smith as executors of the testator of the one part, and the plaintiff, Sneesby, of the other part, for the sale of the property at a certain price. The agreement was signed by Smith on behalf of himself and Thorne. As soon as Thorne learned of the sale he objected on the ground that it was at an under value and on his return to England he declined to implement it. Thereupon the plaintiff sued Thorne and Smith for specific performance. The suit came before Page Wood V-C. Page Wood V-C seems to have dismissed the suit principally on the ground that it would, or might, leave the executors exposed to an action for breach of trust for selling at less than the full value. The action then went to the Court of Appeal in Chancery. Knight Bruce LJ commenced his judgment by assuming, without deciding, that the sale was not at an under value and that the terms were proper and that Smith had, at the time when he signed the contract, power as one of two executors without the concurrence of his co-executor, to enter into a contract effectual at law and in equity for the sale of the property at a sufficient price and on proper terms. He then said (7 De GM & G at 402):

'... I am of opinion, that Mr. Smith never intended to exercise such a power by entering into the contract independently of his co-executor. The form of the contract and the circumstances satisfy me that Smith, when he signed the contract, considered that he had Mr. Thorne's concurrence, and would not have signed it if he had believed that Mr. Thorne would not sanction his act. Thorne had not, in fact, given authority to enter into the contract, and has refused to adopt it. It is, therefore, inoperative as against him personally. To enforce it against Smith and the testator's estate, would be to enforce a contract different from that into which Smith intended to enter.'

Turner LJ said (7 De GM & G at 402, 403):

'It is plain that Smith would never have entered into this contract, had he not supposed that Thorne would ratify it. A decree for specific performance would, therefore, place him in a position in which he never intended to place himself.'

Turner LJ went on to observe that he would have dismissed the suit on the ground of a sale at a possible under value but I am not concerned in this judgment with that part of his decision.

In my view the ratio decidendi of the decision on appeal was this. On the assumption that one of two executors had power in 1852 to sell and transfer leaseholds without the concurrence of his co-executor, the court might well have ordered specific performance if Smith had in fact purported to contract as executor without the concurrence of Thorne. But in fact that was not the contract which Smith purported to make. He purported to contract with the concurrence of Thorne. The contract was expressed to be made by both Thorne and Smith. Smith signed, not only on his own behalf but also as agent for Thorne. On the face of the contract, therefore, it was an agreement the validity of which depended on Smith having Thorne's authority. If Smith had Thorne's authority, well and good. The contract would then have been effectively made by both executors. If he did not have Thorne's authority and Thorne did not ratify the act of his supposed agent, there would be no enforceable contract except that Smith would be liable to Sneesby in damages for breach of warranty of authority. One thing which was plain for all to see was that Smith did not purport to enter into a contract without the concurrence of his co-executor; that would have been an entirely different contract. To put the matter shortly, a contract purporting to be

[1974] 2 All ER 280 at 287

made by two executors jointly cannot be enforced as if it were a contract by one executor severally when it transpires that the other executor did not contract.

In my judgment the decision in Sneesby v Thorne completely covers the present case. The son did not purport to bind the estate of the deceased without the concurrence of the widow. He purported to bind the estate for himself, as one administrator, and as the authorised agent of the widow as his co-administrator. He bound himself as one of two administrators and he warranted that he had authority to bind the other administrator, the widow. He did not bind himself to sell without the concurrence of the widow. It was really the reverse. He bound the estate of the deceased only on the assumption, which he warranted to be correct, that he had authority to sign as agent for the widow. That assumption having been falsified, there is no contract to be enforced in relation to the second property. All that may be sued on is the warranty of authority given by the son. I say nothing about the enforcement of the contract in relation to the first property as that is not an issue before me.

In the circumstances the summons is dismissed.

Summons dismissed.

Solicitors: Vizards (for the plaintiff company); Robbins, Olivey & Lake (for the defendants).

Susan Corbett Barrister