IDOWU & ANOR (RESPONDENT)
(1975) All N.L.R. 182
Division: Supreme Court
Date of Judgment: 18th April, 1975
Before: Coker, Sowemimo and Ibekwe, JJ.S.C.
Appeal from the High Court, Lagos State.
The plaintiff/appellant claimed (i) a declaration that he is the owner in equity of property at 47, Idumagbo Avenue, Lagos and (ii) an order that the defendants should convey the said property to him.
The undisputed facts are that one Onashile mortgaged the property, as the original owner to Barclays Bank before 1961 as security for an overdraft of £10,000 with interest; Onashile had deposited his title deeds with the Bank thus creating an equitable mortgage.
In 1962, the plaintiff knew of the equitable mortgage but nevertheless agreed to purchase the property from Onashile for £10,000; receipts issued for the instalmental payments of the purchase price between 1962 and 1964 were tendered in evidence.
The Bank sued Onashile for refund of the overdraft, and by consent got judgment of £12,000 entered against Onashile. The Bank obtained court's leave to sell the property. Defendants purchased the property from the court and obtained the purchase certificate from the court for the right, title and interest of Onashile. The defendant registered their title to the property under the Registration of Titles Act 1935. Trial Court found for the defendants; declaring them as registered title owners of the property as claimed in their counter-claim and dismissed plaintiff's claim on the ground that Onashile had no property to sell in 1962. On appeal to the Supreme Court;
(1) that Onashile had only an equity of redemption since the equitable mortgage by way of deposit of the title deed remained with the Barclays Bank in 1962. When the defendants purchased the property from the Barclays Bank (judgment creditors) they obtained the interest of the Bank in the equitable mortgage as well as the equity of redemption which was still vested in Onashile, and they thereby acquired good title to the property. When Onashile purported to sell his property to the plaintiff all he had at that time was the equity of redemption, and this was what he had sold, but did not sell to plaintiff. In the result in 1962 what the plaintiff purchased did not constitute any interest in the property under the receipts issued to him;
(2) that where property is subject to an equitable mortgage to a third party, the owner of that property has only an equity of redemption and;
(3) that having obtained leave of the court therefore, the right, title and interest of Onashile sold to the defendants/respondents gave them all the title of the judgment creditor (Barclays Bank)-equitable Mortgagee-and that of judgment debtor (Onashile)-equity of redemption. The defendants/respondents thereby acquired a good title, which was registered without opposition, under the Registration of Titles Act Cap. 181 and their counter-claim succeeds.
Cases referred to:
Kadiri v. Olusoga (1956) 1 F.S.C. 59.
New South Wales v. O'Connor (1889) 14 A.C. 273 at 282.
T. B. Ogunmade v. Chief E. A. A. Fadayiro (1972) 8/9 S.C. 1 at 17.
Statutes referred to:
Registration of Titles Act, Cap. 181.
Sheriffs and Civil Process Laws, Ss. 31, 33.
APPEAL from the High Court, Lagos.
SUIT NO. S.C. 378/73.
Chief F. R. A. Williams for plaintiff/appellant.
Mr G. Impey for Defendants/Respondents.
SOWEMIMO J.S.C. (Delivering the Judgment of the court)-The term 'right, title or interest' of a judgment debtor in realty, sold at auction sale ordered by a court, often raises some difficulty, when conflicting claims are made. Such difficulty is easily resolved, once it can be determined the nature of interest of the rival parties.
In this suit, plaintiff claims (a) that he is owner in equity the property at 47 Idumagbo Avenue Lagos, and (b) an order, (if claim (a) succeeds) that the defendants do convey the said property to the plaintiff.
The facts are not so much in dispute. It is agreed by both parties that the property at 47, Idumagbo Avenue, Lagos, originally belonged to one Samuel Talabi Onashile (now deceased). Sometime before 1960, the late Talabi Onashile entered into a banking transaction with Barclays Bank D.C.O. under which the Title Deed of his property was deposited with the Bank. It is enough to say, that the deposit of the title of 47 Idumagbo Avenue Lagos was made to secure an overdraft account of £10,000.
On the facts before the learned trial Judge in this case, he made the following findings:-"I have no hesitation therefore in holding that there was a sale of the property
"The plaintiff under cross-examination stated that he did not see the title deed of (the) property. He did not obtain a conveyance from application for first registration and filed no caution in the Lands Register."
On the other hand, the defendants took precaution to "register their title."
Indeed, in the evidence of Obi, one of the tenants, in the previous trial which was put in evidence at this re-trial he stated at page 24 of the record of proceedings under cross-examination by Impey thus:-
"Knew 1st and 2nd defendants. They and I live in opposite houses. It was Mr Onashile who admitted me into the house. I met Mr Usenfowokan first time about nine months ago. He came into our premises. I did not know who he was. I did not know he bought the property until this case commended."
The defendants have no actual or constructive knowledge of the purchase by the plaintiff of the property from Onashile at the time they bought. The defendants as legal owners have not therefore been divested of the priority which that estate confers.
In conclusion, the plaintiff by reason of his laches and delay is not entitled to the declaration claimed and his claim for conveyance also fails. Both claims are dismissed. The defendants' counter-claim succeeds and Judgment is entered for them accordingly with costs."
The Argument on appeal before us, is as to the nature of the right, title and interest of Onashile in the property at No. 47 Idumagbo Avenue, Lagos, which the respondents bought in 1965 and in respect of which they got a Certificate of Purchase issued by the court.
The learned trial Judge, held that he believed the plaintiff that he agreed to purchase the property from Onashile in July 1962, and paid the agreed purchase price of £10,000 in three instalments-first instalment on 31-10-62-Exhibit A, second instalment on 10th January 1963-Exhibit A1, and third and last instalment on 14th March 1964-Exhibit A2. Receipts were issued to him but no conveyance transferring the property to him was up till the time of the death of Onashile in November 1966 ever executed in his favour. As a matter of fact he had not seen the title deed of the property he bought, up till 13th March 1969 when he gave evidence before the lower court.
With reference to the further averment that rents were collected by him as well as through agents the learned trial Judge had this to say:-
"In the case, I do not believe that the plaintiff collected rents from any of the tenants personally. Rents were collected from any of the tenants personally. Rents were collected for him through agents. The tenants were in possession before the plaintiff bought the property. The receipts Exhibits E-E6 did not show for whom the rents were collected and in my view, any inquiry made of the tenants would not have disclosed the equitable title of the plaintiff. Indeed, in the evidence of Obi, one of the tenants, in the previous trial which was put in evidence at this re-trial he stated at page 24 of the record of proceedings under cross-examination by Impey thus:-
"Knew 1st and 2nd defendants. They and I live in opposite houses. It was Mr Onashile who admitted me into the house. I met Mr Usenfowokan first time about nine months ago. He came into out premises. I did not know who he was. I did not know he bought the property until this case commenced.."
In deciding the issue of the nature of Onashile's title, right or interest in 1965, which plaintiff acquired by this agreement with Onashile in 1962 we wish to refer to this portion of plaintiff's evidence given on 8th May, 1970 under cross-examination by Mr Impey:-
"It is true that I said in a previous proceeding in this Suit that I caused a search to be made in the Land Registry through my Counsel. I want the court to believe that I made the purchase price without getting a conveyance. Onashile told me his deed was with the bank and would hand it over to me on release by the Bank." (Italics ours)
The learned trial Judge in his judgment inter alia, said:-
"Under cross-examination, the plaintiff admitted that he did not see the title deed of the property before he bought and in the judgment sworn (shown) to him he read that Onashile was owing the Barclays Bank the sum of £10,000." (Italics ours)
The state of the law in Nigeria in regard to Equitable Mortgages is that one is created where there is deposit of a deed of title as security.
It is now clear that the following is the state of affairs with regards to the property:-
(a) Onashile mortgaged 47 Idumagbo Avenue, Lagos to the Barclays Bank before 1962 by way of an equitable mortgage for a security of £10,000. The title deed of the property was deposited with the Barclays Bank.
(b) Onashile offered the sale of the property to the plaintiff/appellant in this case for £10,000 and issued receipt for the purchase money which was paid between 1962 and 1964. At the time of purchase the plaintiff/appellant knew of the equitable mortgage of the property to the Barclays Bank and did not obtain the conveyance from Onashile until his death in November, 1966.
(c) Barclays Bank by virtue of the equitable mortgage sued Onashile in 1963 for the principal of £10,000 loan and in addition interests thereon and got judgment by consent against Onashile.
(d) A writ of execution on the personal property of Onashile was insufficient to satisfy the judgment debt of Barclays Bank and so an order of court was obtained to sell the property of Onashile.
(e) The defendants/respondents in this case bought the property at an auction sale conducted by the court and got a Certificate of Purchase of the right, interest and title of Onashile. The defendants subsequently registered the property as the owner under the Registration of Titles Act Cap. 181. The plaintiff/appellant did not oppose the registration.
The question posed to the court was that although there was an equitable mortgage on the property before the appellant purchased yet Onashile was in a position to create an equitable interest in favour of the plaintiff/appellant. It must be appreciated that once an equitable mortgage has been created on a property the mortgagor's interest is only to demand by way of right to an equity of redemption that the title deed be released to him on payment of the loan advanced so that if any interest was ever sold to the plaintiff/appellant it could only be the interest which at the material time the mortgagor himself has. We wish to draw attention to this statement of the law:-
"147. The charge created by a deposit of deeds, and extends to every estate and interest possessed by the depositor at the time of the deposit, every interest which he afterwards acquires, and all incidental rights, such as the goodwill of a business carried on upon the premises. A limited owner can charge only his own estate by a deposit; but parol evidence of the assent of the remainderman is admissible to charge the inheritance.
The deposit cannot create an equitable mortgage on property to which the deeds do not relate, notwithstanding that by a misapprehension the creditor believes that they relate to the property."
-(Halsbury's Laws of England Vol. 21, 1st Edition.)
In Kadiri vs. Olusoga (1956) 1 F.S.C. the Federal Supreme Court decided:-
"It is the case, as stated by the learned trial Judge, that the security given was not in the form of a "legal mortgage" that is to say by deed, transferring the legal estate to the respondent, but the deposit of title deeds as security for a loan is an equitable mortgage, and I am unable to agree that the loan was an unsecured one within the meaning of the legislation in question. As Lord Macnaghten said when delivering the Judgment of the Board in Bank of New South Wales v. O'Connor, (1). "It is a well established rule of equity that a deposit of a document of title without either writing or word of mouth will create in equity a charge upon the property to which the document relates to the extent of the interest of the person who makes the deposit. In the absence of consent that charge can only be displaced by actual payment of the amount secured."
In support of that judgment reliance was placed on the case of Bank of New South Wales v. O'Connor  14 A.C. page 273 at page 282:-
"The bank was no doubt bound to deliver up the deeds on payment of the sum secured, with interest and costs, if any. But, in their Lordships' opinion, there is no foundation for the proposition that a tender properly made and improperly rejected is equivalent to payment in the case of a mortgage. The proposition seems to be founded on a mistaken analogy. If a chattel be pledged, the general property remains in the pledgor. The pledgee has only a special property. According to the doctrines of common law, that special property is determined if a proper tender is made and refused. The pledgee then becomes a wrongdoer. The pledgor can at once recover the chattel by action at law. But it is not so in the case of a mortgage, where the mortgagor's estate is gone by law, nor is it so in the case of an equitable mortgage. A mortgagor coming into equity to redeem, must do equity and pay principal, interest, and costs before he can recover the property which at law is not his. So it is in the case of an equitable mortgage. It is a well established rule of equity that a deposit of a document of title without either writing or word of mouth will create in equity a charge upon the property to which the document relates to the extent of the interest of the person who makes the deposit. In the absence of consent that charge can only be displaced by actual payment of the amount secured. Before the fusion of law and equity a Court of Equity would undoubtedly have restrained the legal owner of the property from recovering his title deeds at law so long as the charge continued, and now when law and equity are both administered by the same Court if there be any conflict the rules of equity must prevail. In Postlethwaite v. Blythe (1), where property had been conveyed to secure a debt of a comparatively small amount, the Lord Chancellor refused to direct a release upon payment into Court of the largest sum to which the debt would in probability amount. Lord Eldon said: "I take it to be contrary to the whole course of proceeding in this Court to compel a creditor to part with his security till he has received his money. Nothing but consent can authorize me to take the estate from the plaintiff before payment."
It is quite clear therefore that although Onashile purported to possess a fee simple of the property that is subject to the equitable mortgage and therefore he could not alienate the property to the plaintiff/appellant in this case except to the extent of selling his equity of redemption. It is therefore absolutely academic without any substance whatsoever to suggest that the fee simple interest in the property was in 1962 in Onashile thus enabling him to pass a purported equitable interest in the property to the plaintiff/appellant.
It is not in dispute that this property was sold by order of court and that the right title and interest of Onashile was thereby sold. The effect in law, of the order of court was to extinguish Onashile's equity of redemption.
We had had occasion to refer to the estate of a person who purchased as a result of court sale and no application was made within the relevant time to set aside such sale. This point was deal with in the case of T. B. Ogunmade v. Chief E. A. A. Fadayiro (1972) 8/9 S.C. page 1 at page 17:-
"It is therefore obvious that after the period prescribed by section 31 shall have elapsed or expired, the sale of immovable property under the Sheriffs and Civil Process Law becomes absolute and "the court shall grant a Certificate to the person who may have been declared the purchaser at such sale "and by virtue of the same section" such certificate shall be taken and deemed to be a valid transfer of such right title and interest." So, what the plaintiff should have claimed is a Certificate of Title under section 33 and we think that in the circumstances of this case he is entitled to such a certificate."
This being the bone of contention argued before us, we do not think it necessary to consider other points raised in the judgment of the learned trial Judge. We are satisfied that the plaintiff/appellant in the purported sale of 1962 from Onashile acquired no interest for which he sought a declaration in his writ. We are satisfied that the defendants/respondents are the owners of the property No. 47 Idumagbo Avenue, Lagos duly registered under the law as No. 25 at page 25 in Volume 962 of the Register of Deeds in Lagos.
The appeal therefore fails and it is dismissed. The judgment of the learned trial Judge is upheld. The plaintiff/appellant will pay to the defendants/respondents costs of