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Issues: (i) whether the contesting transferees could resist the mortgage claim on the ground of undue influence exercised on the mortgagor; (ii) whether the oral arrangement fixing a reduced amount for release of the mortgage was admissible and binding as a contract or by estoppel against the mortgagee and his assignee; (iii) whether a subsequent mortgagee could claim the benefit of that arrangement or rateable distribution against the properties already released.
Issue (i): Whether the contesting transferees could resist the mortgage claim on the ground of undue influence exercised on the mortgagor.
Analysis: A contract avoided for undue influence can be set aside only by the party whose consent was allegedly procured by that influence. The mortgagor did not avoid the transaction, and the transferees, standing in their own right as purchasers of portions of the mortgaged property, were not entitled to impeach the mortgage on that ground.
Conclusion: The plea of undue influence was not available to the contesting transferees and failed against the appellant.
Issue (ii): Whether the oral arrangement fixing a reduced amount for release of the mortgage was admissible and binding as a contract or by estoppel against the mortgagee and his assignee.
Analysis: The alleged agreement did not vary the written mortgage instrument; it was a separate arrangement concerning the terms on which the mortgagee would release his security. Section 92 of the Evidence Act did not exclude such evidence. On the facts found, there was a concluded bargain supported by consideration, because the purchasers altered their position and completed the purchase in reliance on the mortgagee's assurance. Independently, the mortgagee was held to be estopped from asserting the larger claim after inducing the purchase on the faith of his representation, and the assignee was equally bound.
Conclusion: The arrangement was admissible and binding, and the appellant could not recover more than the amount fixed under that arrangement from the released properties.
Issue (iii): Whether a subsequent mortgagee could claim the benefit of that arrangement or rateable distribution against the properties already released.
Analysis: The subsequent mortgagee had not been the recipient of any representation and could not invoke the prior arrangement. The release had already diminished the mortgage security, and the burden of the debt could be thrown upon the remaining properties. He therefore could not claim rateable distribution as against the appellant's restricted claim on the released properties.
Conclusion: The subsequent mortgagee's defence failed, and the appellant's claim survived against the remaining properties.
Final Conclusion: The decree was varied so that the appellant recovered only the reduced amount against the properties released in favour of the purchasers, while the balance of the mortgage claim was enforceable against the other properties. The appeal succeeded in part and failed in part.
Ratio Decidendi: A transferee of mortgaged property cannot set up undue influence practised on the mortgagor unless the mortgagor himself avoids the transaction, and a mortgagee who induces purchasers to act on a specific representation as to the amount payable for release of the security may be bound by that representation either as a concluded contract supported by consideration or by estoppel.
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