VISCOUNT HALDANE L.C.
My Lords, the facts out of which this litigation has arisen lie in a short compass. The question is whether certain articles of silver plate, which were pledged by one A. A. Solomon to the appellants under a contract of pawn, were validly pledged. A. A. Solomon was one of the executors of the will of Moses Solomon, which was made in 1878. The testator appointed A. A. Solomon and J. D. Solomon to be the executors and trustees; and after giving certain pecuniary legacies the testator devised and bequeathed the residue of his real and personal estate of every kind to his trustees upon trust for sale, payment of expenses, and division of the residue into four equal parts, two of which were settled. The will was duly proved, and very shortly after, in the next year, J. D. Solomon, the other executor, put in a residuary account. In so doing, as one of two executors has authority to act for both, he bound his co-executor. The account shewed the particulars of the estate of the testator and that the debts had been paid. It concluded with a declaration in which the executor stated that the account was a true account and that he offered to pay duty upon a balance of residue mentioned "to which I am entitled and intended [ sic ] to retain to my own use and for the use of Alfred Abraham Solomon, Harriet Wolff and Sarah Levy," being the beneficiaries under the will. My Lords, the only other point I need mention is that in Mr. J. D. Solomon's evidence given at the trial he said that the debts were all paid very shortly after the testator's death.
Now, my Lords, the meaning of a residuary account must of course be construed with reference to its purpose. It is not a document which is intended to have the operation of a declaration of trust; but it may be looked at as against the executor as evidence of what he regarded as being the position of the estate. I think it is plain from that document that Mr. J. D. Solomon regarded the debts as having been all paid and the estate as ready to be held upon the trusts of the will which affected it in the hands of the trustees.
My Lords, having said so much, I will conclude the history of the case. The chattels which form the subject of the appeal were articles of silver plate which belonged to the testator, and they appear to have been left in the custody of A. A. Solomon. A. A. Solomon held them as custodian for the executors and trustees, and he retained possession of them till the year 1892, when he improperly pawned them with the appellants. The latter had no knowledge of his position and dealt with him as an ordinary customer. He died afterwards, and it was subsequently discovered that the plate was pawned, and the respondents, being the trustees for the time being of the will, brought an action against the appellants to recover the articles pledged as having been pledged without any title on the part of A. A. Solomon to so deal with them.
The action was tried before Joyce J., and Joyce J. decided in the appellants' favour, taking the ground that A. A. Solomon retained the powers of an executor notwithstanding the lapse of time, and was therefore in a position to pledge. There was an appeal to the Court of Appeal, and the Court of Appeal unanimously decided that Joyce J.'s judgment was wrong. Fletcher Moulton L.J. based his Judgment on the ground that the executor had ceased to hold the plate as executor, and that the property in it had, from the date of the residuary account, been in the trustees, so that there was no title to deal with these chattels which existed in A. A. Solomon in 1892.
My Lords, I agree with the judgment of Fletcher Moulton L.J. The real point is, I think, more simple than it was regarded as being by his colleagues in the Court of Appeal, and the question is largely one of fact. The general principles of law which govern this case are not doubtful. The position of an executor is a peculiar one. He is appointed by the will, but then, by virtue of his office, by the operation of law and not under the bequest in the will, he takes a title to the personal property of the testator, which vests him with the plenum dominium over the testator's chattels. He takes that, I say, by virtue of his office. The will becomes operative so far as its dispositions of personalty are concerned only it and when the executor assents to those dispositions. It is true that by virtue of his office he has a general power to sell or pledge for the purpose of paying debts and getting in the money value of the estate. He is executor and he remains executor for an indefinite time. Authorities were cited to us by Mr. Hughes to the effect that an executor can sell at a period long after the death of the testator, and that where it is a question of conveyancing, as for instance in the case of the sale of leaseholds by the executor, the purchaser is not entitled to make requisitions as to whether debts remain unpaid, because the executor's office remains intact and he may exercise his functions at any time. That is true as a general principle, and I have no comment to make upon it except that it is qualified by another principle, which is this: The office of executor remains, with its powers attached, but the property which he had originally in the chattels that devolved upon him, and over which these powers extended, does not necessarily remain. So soon as he has assented, and this he may do informally and the assent may be inferred from his conduct, the dispositions of the will become operative, and then the beneficiaries have vested in them the property in those chattels. The transfer is made not by the mere force of the assent of the executor, but by virtue of the dispositions of the will which have become operative because of this assent.
Now, my Lords, in view of the residuary account passed as it was and in the form it was, in view of the evidence of Mr. J. D. Solomon, and in view of the fourteen years which had passed since the testator died before the time when Mr. A. A. Solomon made the pledge to the appellants in 1892, I am of opinion that the true inference to be drawn from the facts is that the executors considered that they had done all that was due from them as executors by 1879, and were content when the residuary account was passed that the dispositions of the will should take effect. That is the inference I draw from the form of the residuary account; and the inference is strengthened when I consider the lapse of time since then, and that in the interval nothing was done by them purporting to be an exercise of power as executors. My Lords, if this be so, this appeal must be disposed of on the footing that in point of fact the executors assented at a very early date to the dispositions of the will taking effect. It follows that under these dispositions the residuary estate, including the chattels in question, became vested in the trustees as trustees. That they were the same persons as the executors does not affect the point, or in my opinion present the least obstacle to the inference. But if that was so, then the title to the silver plate of A. A. Solomon as executor had ceased to exist before he made the pledge of 1892. What then was the position of the appellants? By the law of England the property in a chattel must always be in one person or body of persons. When the person who owns the chattel makes a pledge of it to a pawnbroker he is not purporting to part with the full property or giving any thing which is in the nature of a title to that property to the pawnee, excepting to a limited extent. The expression has been used that the pawnee in such a case has got a special property in the chattel. My Lords, that is true in this sense, that the pawnbroker is entitled to hold the chattel upon the terms that when the possession has been lawfully given to him it is not to be taken away from him, and that if default is made in the redemption of the pledge, or it may be in the payment of interest, he may go further and by virtue of his contract, assuming it to be valid, sell the chattel. But the contract of pawn is simply an illustration of that contract of bailment of which Holt C.J. gave the famous exposition in the great case of Coggs v. Bernard(1); and it rests upon this foundation, that the property remains in the bailor, and that the bailee, whether it be a bailment by way of pawn or in any other form, simply takes at the outside a right to the possession dependent on the validity of the title of the bailor with the other rights possibly superadded to which I have referred. If that be true, upon no hypothesis did the appellants get a legal title to the property in the plate. When A. A. Solomon handed over these articles of silver to Messrs. Attenborough he had no property to pass as executor; and they got no contractual rights which could prevail against the trustees. The latter were the true owners and they are now in a position to maintain an action,
(1) (1703) 2 Ld. Raym. 909.
which under the old forms would have been an action of trover or detinue, to recover possession of the chattels free from the restrictions on the right to reclaim possession which were sought to be imposed by the contract between A. A. Solomon and the appellants. My Lords, the property, if I am right in the inference which I draw from the circumstances of the case, was vested not in A. A. Solomon, but in A. A. Solomon and his co-trustee jointly in 1892, when the attempted pledge was made; and I see no answer to the case made for the respondents that the present trustees, in whom that property is now vested, are entitled to recover it.
A great deal of authority has been cited to us in the course of this case. Mr. Hughes has said, and with truth so far as the bare proposition goes, that persons dealing with executors have not got to inquire whether the debts are paid, and must assume that their powers are operative. Two of the learned judges in the Court of Appeal appear to have felt some concern over the question of the relevancy of that proposition. But the question which goes to the root of this case is one which renders such a proposition wholly beside the point. If I am right, there is no question here of an executor acting in the execution of his powers, so far as this residue is concerned. The executors had long ago lost their vested right of property as executors and become, so far as the title to it was concerned trustees under the will. Executors they remained, but they were executors who had become divested, by their assent to the dispositions of the will, of the property which was theirs virtute officii; and their right in rem, their title of property, had been transformed into a right in personam, - a right to get the property back by proper proceedings against those in whom the property should be vested if it turned out that they required it for payment of debts for which they had made no provision. My Lords, that right always remains to the executors and they can always exercise it, but it is a right to bring an action, not a right of property, and not such a right as would enable such a pledge as this to be validly made. I have therefore arrived at the clear conclusion that at the time when the pledge to Messrs. Attenborough was attempted A. A. Solomon had no title in virtue of which he could make it; and that the respondents are therefore entitled to succeed in their action. I move that the appeal be dismissed with costs.
My Lords, I concur and have nothing to add.
LORD SHAW OF DUNFERMLINE.
My Lords, I concur.