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at once be aware that that was a much greater quantity of land than was in the inner two miles of lots 19 and 20, Judgment. and if he did not accurately know the acreage of the outer 2 miles of these lots he would nevertheless be aware that 418 acres would be nearly equal to the quantity of land in both the inner and the outer. The defendant seeks to account for the acreage being put at 418 by the theory that the plaintiffs' agent when examining the land was misled by the fact that defendant resided on lot 18, and that he, the agent, in fact examined the inner two miles of lots 18, 19 and 20 which, taken together, would have an acreage of over 418. That theory seems to be negatived by the fact that the diagram or rough chart of the land on the application which the agent certified as correct shows only one building (the granary on lots 19 and 20). If he had inspected lot 18 as part of the proposed security he would naturally have required the diagram to show the dwelling house, stables &c., which were on 18.

The defendant's counsel contends that the diagram shows that the outer two miles were not intended to be included as it is nearly all taken up with the inner 2 miles, leaving little or no space to indicate the outer 2. But that is naturally accounted for by the fact that there were no improvements of any kind on the outer two miles and hence they did not require to be drawn to scale with the inner 2.

However, whatever the land was that was inspected, and whatever the diagram showed, the fact remains that defendant, knowing what he was doing, signed the mortgage the description in which said that it covered 418


Secondly. The defendant's action in the year 1885 with regard to the discharge from the mortgage of the railway's right of way, and his acquiescence by his acts in the assumption that the right of way, which was in the outer 2 miles, was covered by the mortgage, seem


fairly conclusive evidence that he then thought that the Judgment. mortgage included the outer 2 miles and also evidence that he had always intended it to do so.


The request of the railway for the partial discharge drew his attention distinctly to the point, and he accepted that as the situation without demur. He would hardly have done so had he supposed the outer two miles to be free.

The mortgage remained at the plaintiffs' head office in Toronto. We can hardly assume that their officials at that office understood Manitoba surveys or had any ground for suspecting the description to be inaccurate. The statement in it that it covered 418 acres would naturally lead them to believe that it did. In any case their suspicions would be lulled by defendant's asking them to execute a discharge of the right of way which described the land to be released as parts of the outer 2 miles.

There seems therefore to be no ground for holding that plaintiffs knew of and acquiesced in the mistake.

As to the Statute of Limitations. The time began to run not earlier, I think, than the plaintiffs' receipt of the money paid by the railway for the right of way and sent to the plaintiffs by the railway at defendant's request. That would be subsequent to 2nd April, 1885.

As above explained I do not consider the payments in 1888, or 1889, as applied on either principal or interest. If that is correct they do not affect the question of when the statute began to run.

The defendant left the land in 1892, only seven years after the statute began to run in his favor or, if it began to run at the time of the first default on the mortgage in May, 1884, then he left eight years after it so began. Neither period. period was long enough to give a title by possession. He claims that after so leaving in 1892 he continued to hold possession through his tenant his brother-in-law Alfred Fowler.

All or about all that Alfred Fowler did was to cut hay on the land. He did not reside on it and. at the same time that he was cutting hay, Robert Fowler, who cut it with him, was acting under permits from plaintiffs.

In 1893 the plaintiffs paid all the taxes from 1888 inclusive and they have since paid the taxes every year. The defendant has never paid or attempted to pay taxes

since those of 1887.

The plaintiffs had the right to possession while there was default. If defendant had again entered he would have been a trespasser during default. I can not see why he should be held to be in possession merely because, though not entitled to such possession, he purported to authorize Alfred Fowler to commit acts which in effect were only occasional trespasses to cut hay. These hay cuttings, being temporary enterings on the property and not a continuous possession, are not, I think, evidence of possession by anyone such as the statute contemplates. But, if they were, they were authorized by each party separately, and the possession by the Fowlers, who acted together, should in that case rather be held to be under the plaintiffs who had the right of possession owing to the default on the mortgage, than under defendant who had no power to authorize the cuttings.

Therefore either the plaintiffs were in possession from 1893 when the hay cuttings began, or no one was. In either case the statute did not run in defendant's favour after he abandoned the land in 1892. He had then had no more than eight years of adverse possession which would not give him a title under the Act.

In Bucknam v. Stewart, 11 M. R. 625, it was held that a mortgagor of vacant land is not considered to be in possession during default and in the absence of actual possession by either party.

In Trustees, Executors & Agency Co. v. Short, 13 A. C. 793, it was held that, though the statute had begun to





run in favour of a person in adverse possession, it ceased Judgment. to so run at once on his giving up possession before the arrival of the time at which such possession, if continued, would have given him a title under the Act.


It was argued for the defence that, as the law now stands, the Real Property Limitation Act should be construed with regard to all real estate mortgages as it would with reference to a mortgage of land the title to which had, before the making of the mortgage, been brought under the provisions of the Real Property Act, and that, in such case, a mortgagee of unoccupied land would not be held to be in possession after default.

Without considering the effect of the Statute of Limitations on a mortgage under the new system, or the question of who would be held in case of default to be in possession of unoccupied land covered by one, there is, patently, a great difference between the case of a first mortgage under the old system where the legal estate is in the mortgagee subject to merely an equitable right to redeem, and a mortgage under the new system where the mortgagee does not get the legal estate but has merely a statutory charge on the land. I am of opinion that, as to the former at least, the law as stated in Bucknam v. Stewart applies.

It should be stated that during the argument it was urged for the defendant that the title papers produced from the plaintiffs' custody did not include separate abstracts for the outer 2 miles of the lots, and that their absence showed that the plaintiffs' then solicitors when investigating the title did not consider that the outer 2 miles of these lots was included in the security. A question arose as to whether separate abstracts were kept of the outer 2 miles at the Registry Offices, and it was agreed that I should, after the argument, ask Mr. Macara, the District Registrar, as to the point and be guided by his answer. I did so and was informed by him that



separate abstracts had never been kept, but that, as to parish lots, the entries as to the outer 2 miles of every lot Judgment. were kept in the same abstract with the inner two miles. of the same lot, notwithstanding that the lots themselves were the result of separate surveys and were shown on separate Government plans.

There remains to be considered the rate of interest to be allowed the plaintiffs as damages for default in payment of the principal and for what length of time it is recoverable.

The mortgage principal became due on 25th May, 1884. The provision as to interest is that it shall be "at the rate of eight per cent per annum to be paid halfyearly on each twenty-fifth day of May and November after the date hereof on so much principal money hereby secured as shall from time to time remain unpaid till the whole of the said principal is paid.”

Following Freehold v. McLean, 8 M. R.116, and Man. & N. W. Loan Co. v. Barker, 8 M. R. 296, in each of which cases the redemption clause was in effect much like that in this case, and in the latter of which the wording was almost identical with the clause now in question, the contract to pay interest must be held to have ceased with the instalment due 25th May, 1884, when the principal became due. Interest thereafter is only recoverable as damages and only at the statutory rate, and only six years arrears prior to the bringing of this action can be recovered.

There is next the question of what rate is to be allowed for those six years.

Section 2 of Cap. 127 of Revised Statutes of Canada, 1886, enacted as follows: "Whenever interest is payable by the agreement of parties or by law and no rate is fixed. by such agreement or by law the rate of interest shall be six per cent per annum."

Chapter 29 of 63-4 Vic. which came into force 7th

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