1. In this case, an application was taken out by the receivers appointed by the Court under a preliminary mortgage decree dated 18th December 1928 for a direction as to whether the receivers were bound to insure the mortgaged . premises with the plaintiff company, that is the Prudential Assurance Company as provided by Clause 3 of the mortgage-deed. The application asked the question in an alternative form which concluded with the words or with the nominee of the said defendant John Carapiet Galstaun'. The order which the learned Judge has made is that the receivers
be at liberty to insure the properties with the plaintiff company instead of insuring the same with any company chosen by the defendant John Carapeit Galstaun.
2. It appears that by the terms of the mortgage-deed which is dated 3rd April 1925, it was provided that the mortgagor would keep the properties:
insured with the mortgagee and in the name of the mortgagee against loss or damage by fire and earthquake for such sum as the mortgagee may from time to time determine to be the full insurance value thereof.
3. The usual provisions were included that the mortgagor would pay the premia and that, if the mortgagor refused or neglected to keep the mortgaged premises insured it would be:
lawful for but not obligatory or incumbent on the mortgagee to insure and keep insured the said premises in manner aforesaid or in any other manner the mortgagee may from time to time determine.
4. The costs in that event of effecting the insurance were to be paid on demand by the mortgagor and if not so paid, were to be a charge on the property in addition to the mortgage debt.
5. Now the mortgagor subsequently mortgaged the property to one Mr. Stephen and it appears that there was a further charge to the Imperial Bank. In connexion with the mortgage to Mr. Stephen, certain receivers were appointed to receive the rents and profits and to manage the property. On 10th January 1928 we find a letter whereby the Prudential Company is agreeing with Mr. Galstaun to place the insurance not with themselves as provided by Clause (3), but with a company called the Home Insurance Company of New York. Under that arrangement or permission, the property was insured with the Home Insurance Company of New York and the first question which arises for decision is whether, as Mr. Galstaun contended before the learned Judge, that permission given in January 1928 amounted to a waiver and abandonment of the terms of Clause (3) for all purposes or whether it did not mean merely that the Prudential Company would not insist during the particular years for which permission was given and renewed upon the clause being carried out but that the clause was not given up altogether so as to cease to be any part of the contract in respect of any future year. The learned Judge for reasons which appear to me to be quite clear and sound, has found against Mr. Galstaun on that point holding that the permission given applied to the years for which it was given and renewed and that Clause (3) is still part of the contract which the Prudential Company can resort to when they so choose at the end of any particular period of insurance.
6. The next question is this: It is contended on behalf of Mr. Galstaun that at the time the mortgage was arranged, he made a verbal agreement with the Prudential Company that, while he would be quite willing to covenant to insure the property with them, this must be on the term that he was to get an agency commission of 30 per cent. Now on that matter there was considerable correspondence between the parties and the question was referred to Mr. Gooding who decided upon certain evidence of the sufficiency of which he rather complained that Mr. Galstaun was entitled to the same commission for certain years that he could obtain elsewhere. In the present case, the same matter has arisen at a later stage. What happened was very shortly this: Whereas the plaintiffs the Prudential Company brought their suit for foreclosure in June 1928, in December 1928 an order was made which it is not disputed had the effect of appointing the receivers who came into existence under the second mortgage, namely, Mr. Stephen's mortgage, receivers of the rents issues and profits of the mortgaged property in the plaintiffs' suit. On 16th April 1929, a preliminary decree was passed in the plaintiffs suit and although the suit claimed foreclosure, the decree was that the premises be sold ' either by public auction or by private treaty by the receivers.' The only other term which need be referred to is that the date of redemption was fixed at a somewhat distant date of 31st March 1931. It has since been extended to 31st March 1933.
7. Now when the receivers brought their application for directions on 10th March 1931, Mr. Galstaun took several objections apart from the objection which I have already disposed of, namely, that Clause (3) was no part of the contract. Ho contended that, unless his 30 per cent agency commission was secured to him so that the receivers would not have to pay more than 70 per cent of the premium, he was entitled to object to Clause (3) being carried out at all. He then said that he could insure the mortgaged premises for a very much smaller sum of money by insuring with Lloyd's underwriters according to the terms of the letter which he had obtained from an insurance broker. Finally he said that the Home Insurance Company with which he had insured the property before was very much cheaper and that he could get his 30 per cent commission from them equally well; but he objected altogether to the learned Judge giving a direction to the receivers to insure the property in the ordinary way with the Prudential. In my judgment he made no case whatsoever for objecting to Clause (3) of the contract being carried out by the receivers.
8. Before us it was said that, assuming that Clause (3) had not been abandoned, the rights of the mortgagees under Clause (3) had come to an end because there was no relief given about the matter in the preliminary decree and it was said that Clause (3) and the rights under it were subject to the legal maxim transit in rem-judicatam. In my judgment, that contention is not well-founded. All that happened was that there was a preliminary decree passed and there was an order appointing receivers of the mortgaged property. The order appointing receivers of the mortgaged property meant that the property was in the custody of the Court but the parties were still governed by their contract. It was quite unnecessary that an incidental matter arising out of the receivership should be dealt with by the preliminary decree specially when it was a matter which had arisen out of a subsequent dispute.
9. The next question to my mind is whether this Court on this application will enter into any question as to whether Mr. Galstaun had an oral agreement for an agency commission with the plaintiff company as he professed. It seems to me to be absurd that such a matter should be allowed to complicate a question of this sort in the management of a mortgaged property and I entirely approve of the observations which the learned Judge has made with regard to that. He has not prejudiced Galstaun's claim in any way to take his stand upon such an oral agreement, if he can prove it in a proper proceeding. I see no reason why the order giving liberty to the receivers to insure with the Prudential is a bad order by reason that the learned Judge has not entered into that collateral matter.
10. Before us two further arguments were broached neither of which appears to have been taken before the learned Judge. Mr. Pugh commenting on Clause (3) of the mortgage-deed points out that a policy taken out with the mortgagees in the name of the mortgagees would not appear to be a contract and he cites an authority which seems to me to be a very good authority indeed at Common law to that effect. He also says that if you look carefully at Clause (3), you will find that it gives to the mortgagees an unlimited discretion although they are not re-insuring the property at all to charge the mortgagor with what premia they think fit. I do not desire to say that these two criticisms on Clause (3) are not prima facie important criticisms. But neither of them was taken before the learned Judge and neither of them is taken in the memorandum of appeal to this Court. It can hardly be doubted that the policy which the receivers will take out will be a policy which will cover and secure the puisne mortgagees. Whether the Prudential Company are covered or are not covered is a matter which hardly concerns Mr. Galstaun and before us, though the puisne mortgagees have been made parties to the appeal no one of them appears to complain of the order made by the learned Judge.
11. In my judgment, in these circumstances no case has been made out why we should interfere with the order which has been made and this appeal should be dismissed with costs.
12. I ought to mention that Mr. Page has taken a preliminary point to the effect that the order complained of is not an order from which an appeal lies. In these circumstances it is not necessary to consider this objection.
13. The receivers will be entitled to their costs out of the assets in their hands as (between attorney and client.
14. I agree.