H Trengrouse & Co v Story [1908] HCA 44; (1908) 6 CLR 10 (27 June 1908)

H. Trengrouse & Co. Plaintiffs, Appellants ; and Marion Wynie Story Defendant, Respondent.

This was an action brought by the appellants against the respondent claiming to enforce an equitable mortgage by deposit of a policy of insurance for the sum of £1,000, which had been taken out in the name of the respondent's husband and formally transferred to the respondent under the provisions of the Companies Act 1890. The case made by the appellants, according to the statement of claim, was that the respondent's husband, Story, was indebted to them, and that to secure the debt Story deposited with them a policy of life assurance on his life effected with the Equitable Life Assurance Society of the United States; that on 8th October 1893 it was by writing agreed between the appellants and Story that that policy should be returned to him, and that in lieu thereof he should deposit with them a similar policy for the same amount effected with the Australian Mutual Provident Society to be held upon the same terms; that in accordance with that agreement they returned the Equitable policy to Story and received from him the Australian Mutual Provident Society policy in question, which had been transferred by Story to his wife, the respondent, and which, prior to its delivery to the appellants, had been endorsed by her in blank by her writing her name thereon for the purpose of enabling the policy to be dealt with by Story.

At the trial before àBeckett J., he regarded these pleadings as setting up a mortgage by deposit of a policy the property of the respondent, the deposit being by her authority. Having considered the evidence, he came to the conclusion that her authority to deposit the policy had not been made out by the appellants, and on that ground he dismissed the action. The learned Judge was invited to take an alternative view of the pleadings, and to say that they might also be read as alleging an equitable mortgage of the policy by Story himself before it became the property of his wife, but the learned Judge did not think that the pleadings raised any such case, and he did not pursue that matter further. I will say more upon that point later on, and will deal first with the point which the learned Judge decided.

Treating the case as an action to enforce an equitable mortgage made by the respondent's authority, it is, of course, necessary to prove that authority. The only evidence of authority offered was that her name appears written upon the back of the policy. When it was first taken to the appellants it did not bear any signature of hers upon the back except the signature necessary under the Companies Act 1890 to perfect the transfer to herself, but Story said he would get her endorsement as soon as she returned from the country in a week or ten days. He took the policy away with him, and shortly afterwards brought it back with her name written upon it. That is all that the appellants proved. The respondent, when asked what she knew about the transaction, said that she signed her name on the back of the policy at the same time as, and for the purpose of, the transfer of it to herself. That was evidently a mistake, because when the policy was first taken to the appellants it did not bear her signature elsewhere than in the transfer form. Then she said she had no recollection of the matter. It was sought to show that she and her husband were so mixed up in business transactions at this time that it ought to be inferred that she knew that she was mortgaging the policy, and that she put her name on the back of it to show that her husband had authority to mortgage it. Those may have been the facts, but it was for the appellants to prove them. The onus of proving that a married woman has disposed of her property lies upon those who assert the fact. If they trust to her husband as their agent to procure her authority to make a mortgage, they must take the consequences. It is an established rule that, when property of a wife is claimed by or through her husband, there must be clear evidence that the wife really intended to dispose of it. The learned Judge was of opinion that the respondent was a witness of truth, and that she did not know that it was intended to dispose of the policy otherwise than for her own benefit. Whether he could have come to another conclusion is not for this Court to decide. For my part, I am quite unable to say that I think the learned Judge was wrong, and therefore, so far as that point is concerned, the appeal fails.

I pass now to the other point. It is suggested that, upon the transaction as it clearly appeared in the evidence, an equitable charge upon the policy had been created by Story before his wife acquired any right to it, so that any right she afterwards acquired was subject to the appellants' equity. I will assume that, if there had been a binding contract to mortgage the inchoate contract of insurance before the assignment of the policy to the respondent, that charge would prevail over her registered title. That has been so decided by the Supreme Court of Victoria in Evans v. Stevenson[1], and I will assume that decision to be correct. The main facts relied upon in support of that view are a letter of 8th October 1903 referred to in the pleadings, and the events which took place at the time. That letter, written by Story to the appellants, was as follows:—"In consideration of your returning life policy lodged with you as per my letter of 24th June 1903 I undertake to replace it with a similar policy in the Australian Mutual Provident Society and surrender to you on same terms as the one you now hold." The letter of 24th June 1903 referred to was as follows:—"While not admitting any liability under the claim made by your firm I would prefer to compromise it rather than your firm and myself should be at variance. I therefore hand you as arranged policy of assurance for £1,000 in Equitable Life Assurance Company, and I undertake to get Mrs. Story to make necessary endorsement—this policy to be held by you until I am in a position to make satisfactory proposition to you."

From these documents it would appear that the Equitable Society's policy originally mortgaged was a policy to the benefit of which the respondent was entitled. This appears also from the terms of the policy itself, as far as we can ascertain them. It could not have been made available as a security without the respondent's consent. Then in the letter of 8th October Story agreed to replace that policy with a similar one which was to be handed by him to the appellants on the same terms. A "similar policy" would apparently be a policy for the benefit of the respondent, and to the validity of a mortgage of which her consent would be necessary. But it happened that on the same 8th October Story deposited with the appellants the premium receipt in respect of the new policy, which itself operated as an interim insurance, and it is contended that the deposit of the premium receipt concurrently with the letter of 8th October operated as an equitable mortgage of the contract of insurance. That might be so, if it was the intention of the parties. But it is extremely doubtful, to say the least, whether it ever was the intention of the parties that there should be a mortgage of that contract of insurance, irrespective of the respondent. When the new policy was taken to the appellants it had been already transferred to the respondent, so that it was hers and not her husband's property. No objection, however, was made on that score. It was not objected that the policy was on its face the respondent's. On the contrary, Story said "I will get my wife's endorsement." So that it appears to me clear that the intention of the parties was that the policy to be mortgaged was a policy not belonging to Story but to his wife. If that was the intention of the parties, it is evident that the letter of the 8th October does not record the whole of the contract, and cannot be conclusive. The facts, therefore, tend strongly to show that it was never intended that there should be a mortgage of the contract of insurance by Story irrespective of his wife's rights.

But, even supposing that it was so intended, it is clear that some further evidence might possibly have been given on that point, if the question had been fairly put in issue. The learned Judge thought it was not put in issue, and I have come to the same conclusion. It appears to me that the statement of claim is based on a mortgage of policy belonging to the respondent—a mortgage made by her authority—and I think it would be a complete alteration of the nature of the claim to turn it into one to establish a mortgage of a policy belonging to the husband as against her as a voluntary transferee, and therefore bound by any equities attaching to the policy when transferred. In any event, therefore, it would not be right to give judgment for the appellants without sending the case back for a new trial. But I think the case sought to be set up would be a different case, in support of which there is little, if any, evidence. I think, therefore, that the decision appealed from was right, and I do not think that the appellants ought to be allowed to set up a new case at this stage.

One of the arguments used by the appellants' counsel before this Court was founded on the third ground of appeal, namely, that the plaintiffs were equitable mortgagees of the policy, and that, whatever rights the defendant had in respect of it, were subject to their prior rights as equitable mortgagees. The learned Judge in the Court below declined to consider the case from that point of view, holding, rightly as I think, that it was not open to the plaintiffs on the pleadings.

The essential feature of that contention is that Trengrouse and Company's position as equitable mortgagees was complete without any transfer or consent on the part of Mrs. Story, in other words, that the policy was her husband's property. But the case, and the only case made on the pleadings, was that it was the wife's property, and that with her consent, and as her agent, her husband had deposited it with the plaintiffs as security. The two positions were entirely different, and even if the facts were conclusively in the plaintiffs' favour on this contention, and I do not think they are, it is impossible that this Court should give the plaintiffs an opportunity of succeeding on an issue here which was neither raised in the pleadings nor litigated in the Court below.

The only matter, therefore, for our consideration is whether the learned Judge came to the right conclusion on the issue tried by him. That issue, following the words of the statement of claim, may be put as follows:—"Did the defendant prior to the policy being delivered by her husband to the plaintiffs endorse it in blank by writing her name thereon for the purpose of enabling it to be dealt with by him?" That is entirely a question of fact, proof of which is on the plaintiffs. The only direct evidence put forward was the defendant's signature on the back of the policy. It is written there at the foot of the statutory form of endorsement. The signature is connected with no words of transfer, consent, or authorization, on the part of the defendant. Of itself it proves nothing, and there was no direct evidence to connect it with any consent or intention on her part to transfer to the plaintiffs, or to authorize her husband to deal in any way with the policy. But the plaintiffs gave in evidence certain facts and documents showing, at the least, her formal connection with her husband's business, from which they asked the learned Judge to infer that she had endorsed her name on the policy on the last occasion with the intention of authorizing her husband to bind her interest in depositing the policy with the plaintiffs.

It is not clear to my mind that there was sufficient evidence to justify that inference. But, however that may be, the defendant as a witness on her own behalf expressly denied having given her husband any such authority or having endorsed the policy with any such intention. Her explanation was that she wrote her name on the policy, whether on one occasion or on more than one merely, as she understood, for the purpose of completing the transfer of the policy from her husband to herself. The learned Judge then had to decide between the inference to be drawn from the facts and documents relied on by the plaintiffs and the defendant's own evidence in direct denial. His conclusion necessarily depended upon the value he attached to her testimony. He believed her and decided accordingly.

There are, no doubt, cases in which the inference from established facts and documents is so conclusive as to render not reasonably credible the evidence of a witness who is in contradiction with such an inference. In a case of that kind the Court of Appeal would not hesitate to set aside a decision founded on the testimony of the witness. But this is not such a case. There is nothing inherently improbable in the defendant's account of her part in the transaction. Whether her evidence was to be trusted, notwithstanding the inference from the facts and documents on which the plaintiffs relied, depended entirely upon the opinion the Judge formed as to her credibility after having the advantage of being in a position to judge her character, temperament and mental capacity as she gave evidence. It is impossible for any tribunal that has not had that advantage to come to a satisfactory conclusion in such a case. Apart, therefore, from the view which I take of the circumstances, it is one of those cases in which I think the Court should be slow to disturb the finding upon facts of the Court of first instance. But, beyond that, I am satisfied from a consideration of the whole case that àBeckett J. came to a right conclusion, and upon reasoning in which I entirely concur. I am therefore of opinion that the appeal must fail.

I concur. The plaintiffs rested their case in their pleadings and at the trial on an equitable mortgage of the Australian Mutual Provident Society policy said to have been made by the defendant, the wife, acting through her husband as agent. The learned Judge at the trial saw the defendant in the box, and believed her evidence that the defendant did not give the authority to her husband; and he also pointed out, as an additional reason for his conclusion, that the plaintiffs would have to satisfy him that the wife clearly understood what she was doing, and was not unduly influenced by the husband. Now the plaintiffs' counsel seek to rely on an equitable mortgage of the policy by the husband, by the letter of 8th October 1903, set out in paragraph 2 of the statement of claim, and urge that the registered transfer of the policy by the husband to the wife was intended to be subject to his equitable mortgage, especially as in fact the premium receipt was deposited on that date. Apart altogether from the husband's intention in the registered transfer, I thought, during the argument, that there might be a strong case made under the doctrine as to assignments of choses in action—that the equitable mortgage being prior in time had priority in right over the registered transfer; and for this purpose the Victorian case of Evans v. Stevenson[2] was cited as an authority. But I am clearly of opinion that it would be unjust to the defendant to allow such a contention to be raised on these pleadings, and especially at this stage of the case. It is enough to say that possibly the defendant could have adduced material evidence as to the agreement made by Story on the 8th October 1903; and that the policy in question, effected with the Australian Mutual Provident Society, does not fit the terms of the letter of that date—for it was not a "similar" policy to the policy which, under that letter, was to be replaced.

[1] [1882] VicLawRp 11; 8 V.L.R. (E.), 108.

[2] [1882] VicLawRp 11; 8 V.L.R. (E.), 108.

High Court of Australia

H Trengrouse & Co v Story [1908] HCA 44; (1908) 6 CLR 10 (27 June 1908)

HIGH COURT OF AUSTRALIA