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bank knew at all material times that the No. 2 account
was an account o f clients’ moneys, and that con
sequently the bank was not entitled to a set-off;
(iii) that the bank was in law debarred from taking
action by the Solicitors’ Act (Northern Ireland), 1938,
Section 37(2). The said Section 37(2) provides that
a bank, at which a solicitor keeps an account for
clients’ moneys, shall not, in respect o f any liability
of the solicitor to the bank (not being a liability in
connection with that account) have any right of
set-off against moneys standing to the credit of that
account. This is however subject to a proviso that
nothing contained in the section is to deprive the
bank of any right existing at the time when the first
optional regulations to be made by the Council of the
Northern Ireland Law Society regarding the keeping -
clients’ money accounts under Section 33 o f the Act
came into operation. No such regulations had, in
point of fact, been made.
It was held by Black, L. J., dismissing the action,
that:—(i) In the absence of any agreement to the
contrary, a bank is entitled to combine customers’
accounts and set off the debit balance of those in debit
against the amount standing to the credit o f those in
credit, unless it has notice that any of these sums are
trust funds ; (ii) That though the nature or number
or magnitude of transactions passing through a parti
cular account o f a solicitor to the bank may afford
notice to the bank that such account is an account of
clients’ moneys, this is a question of fact to be
determined in each case; (iii) That Section 37(2) of
the Solicitors’ (Northern Ireland) Act, 1938, applies
only to accounts which to the knowledge o f the bank
are clients’ moneys accounts ; (iv) That when a Bank
acquires notice that one of the accounts kept by the
customer is a trust account, it may nevertheless
exercise any right of set-off to which it may then be
entitled, having regard to the state o f the accounts
at that time.
Per curiam
:—“ Accounts are merely entries of
transactions in books, and where a customer has
several accounts with a banker, the true position at
any time between banker and customer will only be
found by deducting the aggregate o f the customer’s
debit balance from the aggregate ol his credit bal
ances, or vice versa
Barratt v. Gough
,
Thomas (No.
2)
(Court of Appeal)
(1950) 2
A ll E .
R. 1048. The property in question
at Oswestry was purchased by the plaintiff in June,
1919, and the documents of title were left in the
custody of the defendant as his solicitor. In Decem
ber, 1919, the plaintiff mortgaged the property to one
Reece to secure a sum of £5,000. The defendant
acted for both parties in the matter and the docu
ments of title were never rempved from his custody.
In February, 1941, Reece died and by his will ap
pointed the defendant and three others as executors.
In March, 1944, having previously given six months’
notice to pay off the mortgage, the plaintiff instituted
redemption proceedings against the executors. These
proceedings were adjourned into Court for argument
on the defendant’s claim to a lien on the documents
of title held by him.
Vaisey, J., held (1945) 2 All E. R. 414, that since
the defendant had, by tbe operation of law, become
joint owner, subject to redemption, o f the mortgaged
property and o f the title deeds, these deeds must be
regarded as having passed out of his custody as
solicitor, and, since redemption involved the return
by the mortgagee, not only of the estate, but also of
tbe indicia of the title to the estate, he was not
entitled to any lien on the documents. The Court of
Appeal reversed the order (ibid, 650) on the ground
that it was premature. In January, 1946, the defendant
took a transfer of the mortgage from the mortgagee’s
executors to himself alone and thenceforth held the
documents in question as sole mortgagee. The re
demption proceedings were consequently stayed as
against the other three executors. In February, 1948,
a redemption order was made. The question of the
defendant’s claim to a lien was expressly left open in
the order, with liberty to apply. In February, 1949,
the defendant applied by Chancery summons, for
interalia
, a declaration as to his lien on the documents
of title. On 21 st March, 1949, Romer, J., following
the decision of Vaisey, J., held that the defendant was
not entitled to the lien claimed. On the present
hearing of the appeal against this decision in October,
1950, it was contended for the defendant that, having
received the deeds in his professional capacity, the
defendant became entitled to a lien over them so long
as they remained in his physical possession, and that a
lien so acquired continued to be available against any
claim to possession of the documents regardless of
any intermediate change in the ownership of the
documents or in the identity of the person for whom
the defendant held them.
The Court o f Appeal (Sir Raymond Evershed,
M.R., Asquith and Jenkins, L .J.J.), dismissing the
appeal, held
(i) The defendant’s possession of the
mortgage deed and the right to demand it from him
which the plaintiff now had as a redeeming mort
gagor, were referable solely to the relationship of
mortgagee and mortgagor, and not to that of solicitor
and client. Therefore, the defendant was not entitled
to any lien against the plaintiff, so far as the mort
gage was concerned ; (ii) When a client for whom a
solicitor held title deeds mortgaged the property
comprised in them to another client of the same
solicitor, then, even though the deeds before and
after the mortgage remained continuously in the
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