Distinction between doctrine of tacking and inability to deprive legal owner of his legal rights.

(h) Pilcher v. Rawlins, (1872) 7 Ch. 259, 274; 41 L. J. Ch. 485.

(i) Taylor v. Russell, 1892, A. C. 244, per Lord Macnaghten, at p. 259 ; and see Taylor v. London and County Bkg. Co., 1901, 2 Ch. 231 ; 70 L. J. Ch. 477, judgment of Stirling, L. J.

(k) (1874) 18 Eq. 656, 563; 43 L. J. Ch. 694.

So far as concerns the giving of priority to equitable interests, a trustee can only transfer the property subject to the trusts upon which he holds it. Thus, where the person having the legal estate, holds it in the character of trustee for several successive incumbrancers, he may not create a priority by transferring it to any of them (/). But, for the purposes of this doctrine, he must be strictly a trustee : thus, where the equitable owner of freeholds charged them in favour of A., and covenanted to execute a legal mortgage to him, and afterwards, having got in the legal estate, mortgaged the property in fee to B., who had notice of the prior charge, B. was held to have priority to A., no trust having been created of the legal estate for the latter (m). On the other hand, wherever the purchaser has notice, either express or constructive, of the existence of such a trust at the time of getting in the legal estate, he will take subject to the claims of the cestuis que trust (n). Thus, where a purchaser had notice, after payment of his purchase-money, but before execution of the conveyance, he was held entitled to no benefit from subsequently acquiring the legal estate (o). And where property, which was already subject to an equitable mortgage, was settled, and the trustee made no inquiry as to the deeds, he was held to have been guilty of such negligence as affected him with constructive notice, and the beneficiaries under the settlement were therefore postponed (p).

Illustrations of the distinction.

(/) Sharpies v. Adams, (1863) 32 Beav. 213; see too Colyer v. Finch, (1854) 19 Beav. 500; 5 H. L. C. 905; Maxfield v. Burton, (1873) 17 Eq. 15 ; 13 L. J. Ch. 46 ; and see comments therein on Sharpies v. Adams, 17 Eq. at p. 17.

(m) Garnham v. Skipper, (1886) 55 L. J. Ch. 263.

(n) Saunders v. Dehew, (1692) 2 Vern. 271 ; Allen v. Knight, (1846) 5 Ha. 272 ; 15 L. J. Ch. 430 ; aff. 11

Jar. 527; 16 L. J. Ch. 370; Mum-fordv. Stohwasscr, (1874) 18 Eq. 556 ; 43 L. J. Ch. 694 ; and see judgment of Jessel, M. R. ; Prosser v. Rice, (1859) 28 Beav. 68; Harpham v. Shacklock, (1881) 19 Ch. D. 207 ; Taylor v. London and Count;/ likg. Co., 1901, 2 Ch. 231, 256 ; 70 L. J. Ch. 477.

(o) Wigg v. W., (1739) 1 Atk. 382 ; and see Davics v. Thomas, (1836) 2 Y. & C. 234.

Where a purchaser, not having got in an outstanding legal estate, has nevertheless the hest right to call for it, he will in Equity be entitled to its protection (q).

Best right to call for legal estate a protection in Equity.

The rule which forbids tacking by a subsequent incumbrancer, or purchaser, who at the date of his advance, or of completion, has notice (r) of an intermediate incumbrance, extends to the case of further advances made by a first mortgagee after notice of charges subsequent to his own first mortgage. Thus, where a landowner deposited his title deeds with a bank, as security for the balance of his current account, and afterwards, with the knowledge of the bank, contracted to sell the land to a purchaser who had notice of the deposit of the title deeds, the bank was held to have no charge upon the land, as against the purchaser, for further advances made to the vendor after it had received notice of the contract (s). The rule also applies to further advances made in pursuance of an obligation or covenant on the part of the first mortgagee entered into at the time of the first mortgage (t).

Rule as to notice extends to further advances.

(p) Lloyd's Banking Co. v. Jones, (1885) 29 Ch. D. at p. 230 ; 54 L. J. Ch. 931.

(q) See Blake v. Hungerford, (1701) Ch. Prec. 158 ; Wilkes v. Bodington, (1707) 2 Vern. 599 ; Willoughby v. W., (1787) 1 T. R. 763, 768; Charlton v. low, (1734) 3 P. W. 328 ; Exp. Knott, (1806) llVes. 609,618; Bowen v. Evans, (1844) 1 J. & L. at p. 264; Parker v. Carter, (1844) 4 Ha. at p. 410; London and County Bkg. Co. v. Goddard, 1897, 1 Ch. 642 ; 66 L. J. Ch. 261 ; Taylor v. London and County Bkg. Co., 1901, 2 Ch. 231, 263 ; 70 L. J. Ch. 477.

(r) Notice to one mortgagee is notice to his co-mortgagees, Freeman v. Laing, 1899, 2 Ch. 355 ; 68 L. J.

Ch. 586 ; Re Phillips' Trusts, 1903, 1 Ch. 183, 187 ; 72 L. J. Ch. 94.

(s) London § County Bkg. Co. v. Ratcliffe, (1882) 6 A. C. 722 ; 51 L. J. Ch. 28 ; Hopkinson v. Roll, (1861) 9 H. L. C. 514 ; 34 L. J. Ch. 468; Re Macnamara's Est., (1884) 13 L.R. Ir. 158 ; Union Bank of Scotland v. Nat. Bank of Scotland, (1886) 12 A. C. 53. The rule cannot he affected by any alleged custom of trade to the contrary : Daun v. City of London Brewery Co., (1869) 8 Eq. 155 ; 38 L. J. Ch. 454 ; Menzies v. Lightfoot, (1871) 11 Eq. 459; 40 L. J. Ch. 561.

(t) West v. Williams, 1899, 1 Ch. 132; 68 L. J. Ch. 127.

The Building Societies Act, 1836, s. 5, provides that a receipt endorsed by the trustees of a benefit building society upon any mortgage given by any member of the society for all moneys secured by the mortgage, "shall be sufficient to vacate the same, and vest the estate of and in the property comprised in such security in the person or persons for the time being entitled to the equity of redemption"without the necessity of any reconveyance from the trustees. The effect of the words above italicised were at one time considered doubtful, but it has now been decided that they must, in cases where their meaning is ambiguous, be considered as referring to the person or persons who at the time of the endorsement have the best equity to call for the legal estate (u). Sect. 42 of the Building Societies Act, 1874, is similar to s. 5 of the Act of 1836, but provides an alternative method to that of an endorsed receipt, by giving the trustees power to reconvey to the then owner of the equity of redemption, or to such persons and to such uses as he may direct (r).

Effect of endorsed receipt under Building Societies Acts; under the Act of 183G; under the Act of 1874.

The plea of purchase for value without notice has been described, by James, L. J., as "an absolute, unqualified, unanswerable defence, and an unanswerable plea to the jurisdiction of " a Court of Equity (y). This statement, however, is too wide. The doctrine, it is conceived, is more correctly stated as follows (s) : - " The defence was an absolute bar where a Court of Equity was asked to afford assistance to the legal title by the exercise of some special kind of jurisdiction, such as discovery, removal of terms, etc, or where it was asked to exercise some special head of jurisdiction, such as those founded on fraud, accident, or mistake, but it was no such bar where the Court was merely asked to adjust the equitable rights of the plaintiff and others in the exercise of ordinary jurisdiction, the exercise of which it could not have declined without leaving those rights unsettled and in confusion ; but in the latter case, while assuming and exercising jurisdiction, it gave to any purchaser for value, who might have acquired a legal estate, the full benefit of that legal estate, as an adjunct to his equitable right."

Defence of purchaser for valuable consideration without notice.

(u) Hosking v. Smith, (1888) 13 A. C. 582; 58 L. J. Ch. 367; and see Wurtzburg on Bldg. Soc. 4th ed. pp. 22G et teq.

(x) See per Jessel, M. R. in. Fourth City Mutual Soc. v. Williams, (1879) 14 Ch. D. 140; 49 L. J. Ch. 245; and sec Wurtzburg on Bldg. Soc. 4th ed. pp. 225 et seq.

(y) Pitcher v. Rawlins, (1872) 7 Ch. 259, 269; 41 L. J. Ch. 485.

(z) See Haynes' Outlines of Equity, 449, 6th ed.

But this statement, again, requires some explanation. It is clear that where a Court of Equity exercised a concurrent jurisdiction with a Court of Law, i.e. had concurrent jurisdiction to give effect to the legal title, the defence did not apply (a). Such concurrent jurisdiction is illustrated by actions for tithes (b), and for dower (c). In so far as Gomm v. Parrott (d) is inconsistent with this, it must be taken to have been founded on a misapprehension of the nature of the equitable plea by the Common Law judges.

Explanation of the doctrine.

In Phillips v. P. (e), the leading authority upon this doctrine, Lord Westbury classifies the cases in which this defence applied; of these the most familiar instance is the application to the auxiliary jurisdiction of the Court in aid of a legal title, as e.g. where discovery is wanted (/).

Lord

Westbury's classification.

The Judicature Acts, which have provided new means of enforcing judgments, and given to the Court power in all cases to administer both legal and equitable relief, have somewhat diminished the importance of the doctrine. For example, when the legal title has once been established, it is not now necessary, as was formerly the case (g), to apply to a Court of Equity for delivery up of title deeds: and the defence, therefore, is now no answer in such a case (h).

Effect of the Judicature

Acts.

(a) Phillips v. P., (1861) 4 D. F. & J. 20S ; 31 L. J. Ch. 321.

(b) Collins v. Archer, (1830) 1 R. & M. 284.

(c) Williams v. Lambe, (1791) 3 Br. C. C. 264.

(d) (1857) 3 C. B. N. S. 47; 26 L. J. C. P. 279.

(e) Sup. Lord Westbury in substance divides the cases into three classes : (1) Where the application is to the auxiliary jurisdiction; (2) where there are several purchasers or incumbrancers, each claiming an equity, and one who is later in time succeeds in obtaining an outstanding legal estate, his tabula in naufragio; (3) where what is relied on by the purchaser is an equity as distinguished from an equitable estate. But the first and third of these are, apparently, merely species of the genus defined in the text, i.e. of all equitable jurisdiction other than what is concurrent; while the priority obtained in cases coming under the second class is a consequence neither of the application, nor of the non-application, of thedefence, but of the wholly different principle, that in administration Equity may give priority to an equitable estate which is later in time than another equitable estate, on the ground of its owner having the legal estate.

(f) Wallwyn v. Lee, (1863) 9 Ves. 24.