This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
A payment made by the purchaser to an incumbrancer on the estate is prima facie in discharge of the incumbrance, although the latter may have other claims on the purchaser (a). After the conveyance has been executed, the purchaser may (b) discharge out of any purchase-money which remains unpaid, (though secured,) any incumbrances which either have been created by the vendor himself, or are covered by his covenants for title (c) : but not incumbrances paramount to his title, and not covered by his covenants (d) : and this right, it is conceived, would not, where security has been given for the purchase-money, prevail as against an assignee for valuable consideration and without notice, and who, previously to taking the assignment, had ascertained from the purchaser the existence of the debt; otherwise, no one could safely take a transfer of a mortgage by a purchaser to a vendor for securing part of the purchase-money. The case seems to be within the principle of one where it was decided that, where a tenant for life with power of sale had sold an estate, and covenanted that it was free from incumbrances, and the money had been paid to the trustees of the settlement and invested, the purchaser, on discovering the existence of incumbrances, had no claim upon the vendor's life-interest in the money as against an annuitant, to whom, for valuable consideration, and without notice of the fraud committed by the vendor, the trustees of the stock had, at the vendor's request, given an irrevocable power of attorney to receive the dividends (e): and Lord Thurlow, on appeal, intimated an opinion, (which, however, was extra-judicial,) that (irrespectively of the claim of the annuitant) the purchaser could not have followed the money when deposited with the trustees. The case is cited by Lord St. Leonards as an authority for the proposition that, notwithstanding incumbrances have been fraudulently concealed, "the purchaser has no lien on the purchase-money after it is appropriated by the vendor" (f).
How far a purchaser can after conveyance, retain incumbrances out of unpaid purchase-money.
(x) Pilmore v. Hood, (1838) 5 Bing. N. C. 97 ; 8 L. J. C. P. 11 ; and see Langridge v. Levy, (1837) 2 M. & W. 519, 532; 6 L. J. Ex. 137.
(y) Early v. Garrett, 4 Man. & R. 687; 8 L. J. K. B. 76 ; ef. Beben-ham v. Sawbridgc, sup.
(a) Saunders v. Cochrill, (1902) 87 L. T. 30.
(a) Brett v. Marsh. (1687) 1 Veru.
468 ; Heyward v. Lomaz, (1681) ib. 24 ; Smith v. S., (1815) 9 Beav. 80 ; Peters v. Anderson, (1814) 5 Tau. 596.
(b) See Maynard's case, (1676) Freem. 1; Anon., ib. 106.
(c) Sug. 14th ed. 548 ; Tourville v. Naish, (1734) 3 P. W. 307.
(d) Thomas v. Powell, (1794) 2 Cox, 394; Vane v. Lord Barnard, (1708) Gilb. R. 6.
But where the same solicitor, acting for both parties, had received the purchase-money, with, as alleged by the purchaser, the knowledge of an incumbrance, the Court held that he had so received it as agent of the vendor, and the purchaser's petition to have it applied in discharge of the incumbrance was dismissed with costs (y).
Out of purchase-money paid to solicitor as common agent.
A purchaser, buying up incumbrances which the vendor is bound to satisfy, can charge, as against the latter, only the price actually paid for them (h).
Purchaser buying up incumbrances.