Holroyd v Marshall
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11 ER 999
| Holroyd v Marshall | |
|---|---|
.svg) | |
| Court | House of Lords |
| Full case name | Holroyd and Others v J.G. Marshall and Others |
| Decided | 4 August 1862 |
| Citations | (1862) 10 HLC 191 11 ER 999 |
| Case opinions | |
| Lord Westbury LC, Lord Wensleydale, Lord Chelmsford | |
| Keywords | |
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Holroyd v Marshall (1862) 10 HLC 191, 11 ER 999 was a judicial decision of the House of Lords. In that case the House of Lords affirmed that under English law a person could grant a mortgage or other security interest over future property, i.e. property that they did not actually own at the time of granting the charge. Prior to decision, the generally accepted principle under English law was that pursuant to the nemo dat rule it was impossible for a person to convey a security interest in property which they did not own at the time of granting the charge.[1][2]
The case is also notable in that no less than three persons who were, or one day would be, Lord Chancellor, gave judgments. It is also a rare example of one Law Lord interrupting another during their speech to object to a point in their judgment.[3]
The case was decided against the backdrop of the industrial revolution in Victorian England. With the expansion of industry, companies were hungry for capital, and commercial parties were exploring new ways for these companies to raise debt finance by way of debentures. As part of that process debenture holders were seeking greater protection for themselves to protect the capital which they invested in these new ventures to ensure that, if the company failed, that they had a prior claim the company's assets over any competing creditors.
Facts
The underlying borrower was a businessman named James Taylor, who was engaged as a damask manufacturer at Hayes Mill, Ovenden, near Halifax, Yorkshire. The case reports that "[i]n 1858 he became embarrassed, [and] a sale of his effects by auction took place". The Holroyds purchased all of his machinery. They subsequently sold it back to him, but because he could not pay for it, the purchase price was left outstanding and a security interest was granted over the machinery. However, the indenture granting the security interest not only referred to the existing machinery, but separately to:
- "... all machinery, implements, and things which, during the continuance of this security, shall be fixed or placed in or about the said mill, buildings, and appurtenances, in addition to or in substitution for the said premises,[4] or any part thereof ..."
The indenture was duly registered under the Bills of Sale Act 1854 (17 & 18 Vict, c. 36).
As time passed Taylor sold and replaced some of the machinery, and bought some new machinery.
On 13 April 1860 one Emil Preller sued Taylor, and Mr Garth Marshall, the high sheriff of York, executed a writ of scire facias against Taylor and machinery was seized in appropriation of the claims.
On 30 May 1860 the Holroyds filed a bill for relief claiming that they had superior title. The case came initially before the Vice Chancellor, who found in favour of the Holroyds. The judgment creditors then appealed, and the case came before Lord Campbell LC, who reversed the decision. He held:
- "My judgment rests upon Lord Bacon's maxim, 'Licet dispositio de interesse future sit inutilis, tam fieri potest declaratio præcedens quoe sortiatur effectum, interveniente novo actu.' Before any subsequent act is done, the assignment gives an equitable interest as between assignee and assignor; but a legal interest subsequently, bona fide acquired before possession taken by the equitable assignee shall prevail.[5]
The Holroyds then appealed to the House of Lords.
