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.
(x) Agra Bank v. Barry, sup. ; Ratcliffe v. Harvard, (1871) 6 Ch. 652; 10 L. J. Ch. 777.
(y) Hewitt v. Loosemore, (18.31) 9
Ha. 449, 458 ; Worthington v. Morgan, (1849) 1G Si. 547 ; 18 L. J. Ch. 233 ; Penny v. Watts, (1849) 1 M. & G. 150; 19 L. J. Ch. 212.
(z) Toulmin v. Steere, (1817) 3 Mer. 210.
(a) Sheldon v. Cox, (1764) Amb. C24.
(b) Toulmin v. Steere, sup. ; Cook-son v. Zee, (1854) 23 L. J. Ch. 473 ; Wilkins v. Sibley, (1863) 9 Jur. N. S. 888.
(c) Wise v. W., (1845) 2 J. & L. 403; but sec Re Macnamard's Est., (1884) 13 L. R. Ir. 158.
The law, however, upon the subject has been materially altered. Sect. 3 of the Conv. Act, 1882, provides that a purchaser - which expression includes a lessee or mortgagee and an intending purchaser, lessee, or mortgagee or other person who for valuable consideration takes or deals for any property (i), - shall not be prejudicially affected by notice of any instrument, fact, or thing, unless it is within his own knowledge, or would have come to his knowledge, if such inquiries and inspections had been made as ought reasonably to have been made by him: or, unless in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, as such (k), or of his solicitor or other agent, as such, or would have come to the knowledge of his solicitor or other agent, as such, if such inquiries and inspections had been made as ought reasonably (/) to have been made by the solicitor or other agent.
Alteration of the law by Conv. Act, 1882, s. 3.
(d) Brotherton v. Hatt, (1706) 2 Vern. 574; Lowther v. Carlton, (1711) 2 Atk. 242 ; Wilde v. Gibson, (1848) 1 H. L. C. 605, 614, 624 ; Twycross v. Moore, (1850) 13 Ir. Eq. R. 250.
(e) Hargreaves v. Rothwell, (1836)
1 Ke. 154 ; 5 L. J. N. S. Ch. 118; Brothers v. Bence, (1717) Eitzg. 118; Perkins v. Bradley, (1841) 1 Ha. 219 (in which two cases the solicitor was his own client in the later transaction) ; Fuller v. Bennett, (1843) 2 Ha. 394 ; 12 L. J. N. S. Ch. 355 ; Nixon v. Hamilton, (1838) 2 D. & Wal. 364, 391, 393; Lenehan v. M'Cabe, (1840)
2 Ir. Eq. R. 342, 352; Gerrard v. O'Reilly, (1813) 3 D. & War. 411, 431; and see Tylee v. Webb, (1843) 6
(f) See 5 Jarm. Conv. 3rd ed. 490 ; Brine v. Featherstone, (1813) 4 Taun. at p. 873.
(g) See Fuller v. Bennett, sup. ; and Lord Cottenham's remarks as to Mr. Wightwick's evidence in Wilde v. Gibson, (1848) 1 H. L. C. 614, 624.
(h) Thompson v. Cartwright, (1863) 2 D. J. & S. 10 ; 33 L. J. Ch. 234.
(i) Conv.Act, 1882,s.l,sub-s.4 (ii). As the definition is confined to cases where there is valuable consideration, it would seem that the enactment as to constructive notice does not apply to the case of a voluntary conveyance.
The effect of the section (m) is to restrict rather than extend the doctrine of notice. It repeals the evil consequences of the doctrine laid down in Hargreavcs v. Rothwell (n), where it was held that notice was to he imputed to the client if there was such a distance only between the former transaction and that under consideration as left the Court under the impression that the solicitor had actually remembered the former transaction, and that knowledge must therefore be imputed through him to the client. Thus, where A. mortgaged his share of trust property to E. by a deed which disclosed no prior charge, and contained the usual covenant for title by A., though, in fact, A.'s share was subject to a prior mortgage to B., which had been transferred to C. and D. a year before the date of E.'s mortgage ; and B. was the solicitor of the trustees and of A., and had also ac'ed as solicitor for C. and D. in their mortgage transactions, and also for E. in his; it was held that E., who had first given notice to the trustees of the property, was entitled to priority, as his mortgage deed showed clear title in A., the Court declining to infer that B. had any recollection of the former transactions in which he had been employed, or that reasonable inquiries of A., made by him as E.'s solicitor, would have brought to light the prior mortgage of C. and D. (o).
Operation of the section.
(k) See Thorne v. Heard, 1895, A. 0. 495, 501 ; C4 L. J. Ch. 652 ; Taylor v. London and County Bhg. Co., 1901, 2 Ch. 231, 258 ; 70 L. J. Ch. 477.
(I) I.e., ought as a matter of prudence, having regard to what is usually done by men of business under similar circumstances ; Bailey v. Barnes, 1894, 1 Ch. 25, 35; G3
L. J. Ch. 73 ; Taylor v. London and County Bhg. Co., sup. ; Re Alms Corn Charity, 1901, 2 Ch. 750, 701; 71 L. J. Ch. 76.
(m) Bailey v. Barnes, sup.; and fee Sunt v. Luck, 1902, 1 Ch. 428, 435 ; 71 L. J. Ch. 239.
(n) (1836) 1 Ke. 154; 5 L. J. N. S. Ch. 118.
The section will not apply to a case where the solicitor is himself selling or mortgaging to the client with knowledge of an undisclosed blot on the title which he had acquired in a former transaction, but which, as a party to the sale or mortgage in question, he must be deemed to possess in the latter transaction.
Solicitor with knowledge selling or mortgaging to his client.
In the third edition of this work it was stated that, as a general rule, the purchaser is equally affected, with notice, though the solicitor, etc. is also employed by the vendor (p), or is himself the vendor (q), but later decisions have somewhat modified this rule. Thus, the mere fact of the mortgagor being a solicitor and himself preparing the deed, and of the mortgagee employing no independent professional adviser, has been held insufficient to fix the latter with notice of a prior incumbrance known to the solicitor (r): the mortgagee or purchaser may not desire to employ a solicitor, but if he knowingly constitute the relation of solicitor and client between himself and the solicitor of the party with whom he is dealing, he will, of course, be affected with notice of any prior incumbrances of which the solicitor is cognizant (s) : and though a purchaser is not necessarily to be held to have employed his vendor's solicitor, because he employed no other, yet if he employ no solicitor, he must be held to have exactly the same knowledge, and be liable for negligence to the same extent, as if he had employed one (t).