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.
(o) Re Cousins, (1886) 31 Ch. D. 671 ; 55 L. J. Ch. 662.
(p) Le Neve v. Le N., (1748) 3 Atk. 648 ; Dryden v. Frost, (1838) 3 M. & C. 670; 8 L. J. N. S. Ch. 235 ; Sharpe v. Foy, (1868) 4 Ch. 35; Holland v. Hart, (1871) 6 Ch. 678; 40 L. J. Ch. 701.
(q) Sheldon v. Cox, (1764) Amb. 624 ; Dryden v. Frost, stip. ; Hewitt v. Loosemore, (1851) 9 Ha. 449 ;
Robinson v. Briggs, (1853) 1 Sm. & G. 188; Spencer v. Topham, (1856) 22 Beav. 573.
(r) Espin v. Pemberton, (1859) 3 D. & J. 547; 28 L. J. Ch. 311.
(s) lb.; see Ferry v. Boll, (1860) 2 D. F. & J. 38.
(t) Per Lord Romilly in Atterbury v. Wallis, (1856) 2 Jur. N. S. 314, 1117; 8D. M. &G. 454.
But if the mortgagor is a solicitor, and is shown to have become the solicitor of the mortgagee, it can hardly be doubted that the latter must be taken to have had constructive notice (u).
It was decided by Lord Brougham, in opposition to the opinion of Sir J. Leach, that a client is not to be affected with notice of a prior fraud committed by his solicitor, which the latter would, of course, conceal (x). This principle, which is now well established, is perfectly consistent with the cases in which it has been held that a mortgagee, employing the mortgagor as his counsel or solicitor, is affected with constructive notice of a prior,-and, as against the client mortgagee not having actual notice of it, fraudulent, - incumbrance created by such mortgagor. Thus, where a solicitor took a mortgage of an equity of redemption, which he submortgaged, and afterwards joined with the first mortgagee and the mortgagor in a new mortgage of the property, acting as the solicitor of all parties in the transaction, but not disclosing the existence of the submortgage, it was held that the new mortgagee was affected with the solicitor's knowledge, and his security was to that extent displaced (y). So, in a case (2), where a solicitor on behalf of A., one of his clients, procured from B., another client, an advance on mortgage of A.'s land in Middlesex, and then, concealing the incumbrance, induced C, also a client, to lend money on mortgage of the same estate, and C.'s security was the first registered, it was held that the case did not fall within the principle of Kennedy v. Green; and that C, having notice through the solicitor of B.'s mortgage, could not gain priority over it by registration.
Client, how-far affected with notice of fraud hy his solicitor.
(u) In Espin v. Temberton, (1859) 3 D. & J. 547; 28 L. J. Ch. 311, Lord Chelmsford must be taken to have overruled Kindersley, V.-C, (1859) 4 Dr. 333 ; 28 L J. Ch. 309, who held, on the strength of some ambiguous language of Turner, V.-C, in Hewitt v. Looscmore, (1851) 9 Ha. at p. 457, that this was not so.
(x) Kennedy v. Green, (1834) 3 M. & K. G99; Atterburyv, Wallia,nip.; miles v. Greenhill, (1860) 29 Beav, 387 ; Exp. Rogers, (1856) 8 D. M. & G. 271 ; and cf. Holland v. Hart, (1871) 6 Ch. 678 ; 40 L. J. Ch. 701 ;
Kettlewell v. Watson, (1882) 21 Ch. D. 714; 26 ib. 501; 51 L. J. Ch. 281; 53 ib. 717.
(y) Atterbury v. Wallis, (1856) 8 D. M. & G. 454; cf. Dixon v. Winch, 1900, 1 Ch. 736 ; 69 L. J. Ch. 465, stated inf.; see, too, Roberts v. Croft, (1857) 2 D. & J. 1 ; 27 L. J. Ch. 220 ; Hunt v. Elmes, (1860) 2 D. F. & J. 578 ; 30 L. J. Ch. 255 ; Ogilrie v. Jeaffreson, (1S60) 2 Giff. 353 ; 6 Jur. N. S. 970 ; cases of subsequent fraud by the solicitor.
(z) Rolland v. Sort, (1871) 6 Ch. 678, 683; 40 L. J. Ch. 701.
The distinction between the first and second class of cases is this. The duty of the solicitor being to inform the client of the defect in the title, the presumption that he has done so is treated as being one juris et de jure, the danger of perjury being too great to admit of the presumption being rebutted by evidence. But in the first class of cases, i.e., those which fall within the doctrine of Kennedy v. Green, something has been done, prior to the transaction, in respect of which the question of notice arises, by the solicitor, which is fraudulent in itself, and not merely in relation to the client by reason of its not having been communicated to him. In the second class of cases, the very question being whether the client had or had not notice, the absence of notice which is requisite to make the transaction fraudulent cannot be assumed (a).
Distinction between the two classes of cases.
There is a third class of cases in which, if there were no fraud, the client would be affected with constructive notice of a defect of title, the existence of which is known to his Solicitor; and the fact that the solicitor is committing a fraud in relation to what is relied on as a defect cannot here afford any reason why the client should not be affected with constructive notice of the defect. It is the existence of the defect, and not of the fraud, with notice of which the client is affected. Therefore, where a purchaser employed one of three fiduciary owners as his solicitor in the purchase, he was fixed with constructive notice of the trust (b).
A third class.
In Dixon v. Winch, A. mortgaged in fee to his solicitor B., who transferred the mortgage to C, who omitted to give notice of the transfer to the mortgagor ; and, subsequently, the property was sold by A. and the solicitor B. to D., B. acting for all parties. B. fraudulently suppressed the transfer, inserted false recitals in the conveyance, and paid himself off the mortgage debt out of the purchase-money, A. neglecting to call for production of the deeds: it was held that A. having constituted B. his general agent had constructive notice of the transfer, and that therefore the payment of the mortgage debt was ineffectual; and that the transferee, in spite of the fact that he had neglected to give notice of the transfer to the mortgagor, was to be preferred to the purchaser, who, however, had a right to be indemnified by the mortgagor (c).