#6831 - Bonner V. Tottenham Building Society - Restitution of Unjust Enrichment BCL

Bonner v. Tottenham Building Society

Facts

On April 3, 1882, the owner of the premises, Moore, demised them to the plaintiffs for a term of ninety-nine years at the rent of 20l. per annum, which the plaintiffs covenanted to pay. On April 5, 1889, the plaintiffs assigned to Price the residue of the term, Price covenanting with the plaintiffs to pay the covenanted rent and indemnify the plaintiffs therefrom. On October 18, 1889, Price demised by way of mortgage the term less one day to the defendants to secure advances made by them to him, and the defendants covenanted with Price that, if they should enter into possession of the premises and receive the rents and profits, they would pay the yearly rent of 20l. per annum reserved by the lease of April 3, 1882. In November, 1891, Price was adjudicated bankrupt. The defendants have entered into possession of the premises under their mortgage, and have received the rents and profits thereof in part satisfaction of their mortgage debt, and they have remained in possession ever since. The defendants have not paid the rent which accrued whilst they were in possession, and Moore, the landlord, has compelled the plaintiffs, his lessees, under the covenant in their lease with him to do so; they have done so, and they now sue the defendants to recover the amount they have thus had to pay to Moore.

It is clear that no contract or privity of estate exists between the plaintiffs and the defendants, or between the original lessor, Moore, and the defendants.

Holding

A. L. Smith LJ

The ratio decidendi ofMoule v. Garrett(2) is this: If A. is compellable to pay B. damages which C. is also compellable to pay B., then A., having been compelled to pay B., can maintain an action against C. for money so paid, for the circumstances raise an implied request by C. to A. to make such payment in his ease. In other words, A. can call upon C. to indemnify him. To raise this implied request, both A. and C. must, in my judgment, be compellable to pay B.; otherwise, as it seems to me, the payment by A. to B. so far as regards C. is a voluntary payment, which raises no implication of a request by C. to A. to pay. If Cockburn C.J., in his alternative reason inMoule v. Garrettfor holding the defendants liable meant this by the expression "by the legal default of another," I agree; but, if it means by a default for which they were not compellable to pay in that case to the original lessor, I do not agree, and none of the other learned judges who decided that case adopted what Cockburn C.J. then said.

In the present case the defendants are underlessees of an assignee of the term, and are not liable at all to the original lessor for rent whenever it accrued, there being between them and the original lessor neither contract nor privity of estate, and there is no suggestion that there were goods upon the demised premises available for distress other than the goods of the mortgagor Price, even if this would have sufficed to maintain the action, about which I say nothing, for it is not before me.

The fact that in this case the defendants covenanted with Price, the assignee, that if they, the defendants, became mortgagees in possession they would pay the rent, gives Price a remedy against them subject to any set-off which may exist between him and them and does not give the present plaintiffs a right of action against them.

Rigby LJ

The only question in this case is as to the liability of the defendants, who are mortgagees by sub-lease of an assignee of a lease originally granted to the plaintiffs, to indemnify the plaintiffs in respect of rent recovered by the lessor against them on their covenant in the lease.

Now primâ facie a sub-lessee of a lessee or assignee of a term comes under no liability to the original lessor either for payment of rent or performance of covenants in the original lease. This is true whether the sub-lease be by way of sale or by way of mortgage, and entry into possession of the sub-term does not make the sub-lessee liable to the lessor. But it is said that the present case is distinguishable from the ordinary case by the fact that the mortgagees expressly covenanted with their mortgagor (assignee of the lease) that, if they entered into possession, they would out of the rents and profits received by them (among other things) pay the rent, and that they have been, as they have, in possession during the whole time during which the rents recovered by the lessor against the plaintiffs, original lessees, have been accruing.

Distinguishing Moule v. Garret

…but the defendants were not, like the defendants here, holders of a sub-term, but were the actual holders at the time of the breach by puisne assignment of the whole of the original term, and in that capacity liable by privity of estate to the original lessors for the very damages which had been recovered by them against the original lessee, who in the action was seeking to recover them over. Both plaintiff and defendants were under a direct obligation to pay the rent to the lessors; but the defendants reaped all the benefit of the payment. It was treated as plain that, as between the plaintiff and defendants, the liability of the defendants to the original lessors by privity of estate was in the nature of a primary liability, that of the plaintiff by privity of contract being secondary; and on this ground the plaintiff was held entitled to recover over against the defendants, as though he were in a manner surety for them for payment of their debt. Here there is no privity either of estate or contract between the defendants and either the original lessor or the plaintiffs in this action, so that there can be nothing analogous to the relation of principal and surety between them.

Vaughan Williams LJ

The question raised in this case, namely, whether an underlessee, who is a mortgagee by way of demise from an assignee of the lessee, and who is in possession of the demised lands, can be sued for money paid by the lessee, who has been compelled according to his covenant to pay the rent reserved by the principal lease, has not, so far as I know, been directly determined until now. It is plain that,...