Lord Tomlin. -

In this case the defendants in the action are appealing from a judgment of the Appeal Division of the Supreme Court of New Brunswick, dated 26th March 1928. By that judgment the Appeal Division (1) dismissed an appeal of the defendants from a judgment against them for $ 28,000 without interest given by the King's Bench Division of the Supreme Court of New Brunswick, on 20th October 1927, and (2) allowed a cross-appeal of the plaintiff, thereby increasing the amount recoverable against the defendants by $ 9,083.88 in respect of interest.

Two questions only have been argued on this appeal. First, whether upon the true construction of certain covenants the defendants have become liable for the $28,000 for which judgment has been given against them. Secondly, whether defendants are chargeable with interest on any sum which they may be held liable to pay under the covenants.

The facts of the case are as follows :

Prior to the year 1905, the plaintiff's predecessor-in-title, Havelock Mc. C. Hart, acquired land partly in New Brunswick and partly in Maine, on both banks of the Aroostook River in the neighbourhood of the Aroostook Falls, together with certain water privileges for the purpose of developing the water power of the falls.

In 1905, Hart and one Arthur R. Gould (the owner of all the capital stock of the Presque Isle Electric Light Company), entered into an agreement with the defendants whereby Hart was to transfer all his land and water privileges on the Aroostook River to the defendants and Gould was to transfer to the defendants all his capital stook in the Preaque Isle Electric Light Company. The consideration to Hart for the transfer by him of the land and water privileges was (1) the allotment or transfer to him of certain stock of the defendants and (2) the defendants covenants, the true construction of which falls to be determined upon this appeal. The documents relating to the transaction do not contain any reference to the stook to be allotted or transferred to Hart, but it is not disputed that it was part of the bargain, that Hart should have the stock and that the stook was in fact, allotted or transferred to him upon the execution of the indentures of conveyance completing the transaction to which reference will be made hereafter.

The first relevant document is a memorandum of agreement, dated 3rd January 1905, and made between Hart Gould and the defendants. It contained a recital that under arrangements which had been mutually made between them, Gould was to transfer to the defendants all the capital stock of the Presque Isle Electric Light Company and Hart was to convey or cause to be conveyed to the defendants by deeds in the form thereto annexed as Schs. A and B the lands and water privileges described in the said schedules, being the lands and water privileges already referred to.

The operative part of the agreement provided that upon the defendants completing the necessary financial arrangements for the development of water power at the Aroostook Falls to the satisfaction of Gould and Hart, Hart should and would convey or cause to be conveyed to the defendants by deeds in the form thereto annexed as Schs. A and B, the lands and water privileges describe therein and Gould should and would assign and transfer or cause to be assigned and transferred to the defendants all the capital stock of the Presque Isle Electric Light Company.

The stock of the defendants to be allotted or transferred to Hart was duly allotted or transferred to him.

They conveyance of the lands and water privileges by Hart to the defendants was also in due course effected by means of two indentures of conveyance, dated 13th January 1905, one of which related to the land and water privileges in New Brunswick and the other to the land and water privileges in Maine. The two indentures were mutatis mutandis identical in form. Each of them contained a covenant by the defendants with Hart in the following words.

"The said The Maine and New