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.
An agent for sale cannot purchase; except where the purchase is made with the knowledge and consent of his employer (c); in which case the sale is, in substance, made by the employer, and not by the agent to himself. Nor can an agent, or a trustee for sale, purchase from the person to whom he has sold, so long as the contract for sale is executory (d); and a re-purchase by him from the person to whom he has sold, even after the completion of his sale, will be regarded with extreme jealousy (e).
The committee of a lunatic's estate is within the rule; the Court has even refused to confirm a lease to the committee, though approved by the Master as advantageous to the estate (f).
Committee of lunatic.
So also is a director of a company purchasing from the company (g) (unless expressly authorised by the articles).
Director of a company.
A governor of a charity cannot take a lease of the charity lands (h).
Governor of charity.
A solicitor conducting a sale under order of the Court (i), or on behalf of trustees for sale, or of other persons whose duty it is to sell (k), cannot purchase the estate himself.
Solicitor to the party having conduct of sale.
(c) Charter v. Trevelyan, (1844) 4 L. J. N. S. Ch. 209; affd. 11 C. & F. 714, 732; Shannon v. Brandt, (1871) L. R. 6 Q. B. 720, 723; 40 L. J. Q. B. 312; Dunne v. English, (1874) 18 Eq. 524; Be Bussche v. Alt, (1878) 8 Ch. D. 286; 47 L. J. Ch. 381; Mcpherson v. Watt, (1877) 3 A. C. 254.
(d) Parker v. Mckenna, (1874) 10 Ch. 96, 125; 44 L. J. Ch. 425; Williams v. Scott, 1900, A. C. 499, 507; 69 L. J. P. C. 77; Delves v. Gray, 1902, 2 Ch. 606.
(e) Parker v. Mckenna, sup.; and see Be Postlethwaite, (1889) 59 L. T. 58; 60 ib. 514; 37 W. R. 200.
(f) Re Sir J. Smyth, 29 July, 1829, reported in Shelf, on Lunacy, 2nd ed., p. 446.
(g) Aberdeen R. Co. v. Blaikie, (1854) 1 Macq. 461; Re Olympic, Ltd., 1898, 2 Ch. 153; Omnium Electric Palaces, Ltd. v. Baines, 1914, 1 Ch. 332; Buckley, 10th ed. 648.
(h) A.-g. v. Lord Clarendon, (1810) 17 Ves. 491.
(i) Owen v. Foulkes, (1802) 6 Vee. 630, n.; Sidny v. Ranger, (1841) 12 Si. 118.
(k) Ex p. Bennett, (1805) 10 Ves. 381; Morse v. Royal, (1806) 12 Ves. at p. 372; A.-g. v. Earl of Clarendon, (1810) 17 Ves. 491, 500.
The solicitor or agent of a person disqualified from purchasing, would, it is conceived, in general, be unable to purchase on his own account (l).
Solicitor of disqualified purchaser.
A trustee whose duty it is to purchase particular property for his beneficiary (e.g., a trustee of renewable leaseholds bound, if possible, to renew), may never buy it for himself; even though the proposed vendor positively refuse to part with it for the benefit of the beneficiaries (m); but the purchase if effected will be considered as made on their behalf (n); and any additional interest which the trustee acquires by purchase will belong to his beneficiary (o); subject, of course, to the trustee being re-paid the purchase-money. It has been held, however, that this doctrine does not apply to the case of the purchase by a trustee of a reversion expectant upon a lease, if the lease is not renewable by custom or contract (p).
Trustees for purchase.
An auctioneer employed to sell cannot purchase the property himself (q).
Executors and administrators, in respect of the assets of the deceased are in a similar position to trustees (r). So, too, the husband of an administratrix has been held to be in a fiduciary position, and accordingly unable to purchase from a co-administratrix without the consent of all the beneficiaries (s).
Executors and administrators.
(l) Dowries v. Grazebrook, (1817) 3 Mer. at p. 209; Whitcomb v. Minchin, (1820) 5 Mad. 91; Re Bloye's Trust, (1849) 1 M. & G. 488; 19 L. J. Ch. 89; Hesse v. Briant, (1856) 6 D. M. & G. 623; but see Alvanley v. Kinnaird, (1849) 2 M. & G. 1. See further, as to purchases by solicitors, inf. p. 38.
(m) Ex p. Lacey, (1802) 6 Ves. 630; Ex p. Bennett, (1805) 10 Ves. 395; see Turner v. Trelawny, (1841) 12 Si. 49; 10 L. J. Oh. 249; Be Lord Ranelagh's Will, (1884) 26 Ch. D. 590; 53 L. J. Ch. 689; Leigh v. Burnett, (1885) 29 Ch. D. 231; 54 L. J. Oh. 757; Griffith v. Owen, 1907, 1 Ch. 195; and see notes to Keech v. Sandford, 2 Wh. & T. L. C. 9th ed. p. 648; and Fox v. Mackreth, ib. p. 663.
(n) See Tanner v. Elworthy, (1841) 4 Beav. 487.
(o) Fosbrooke v. Balguy, (1833) 1 M. & K. 226; 2 L. J. N. S. Ch. 135; Vaughton v. Noble, (1861) 30 Beav. 34; where, however, the purchase was made out of trust moneys.
(p) Bevan v. Webb, 1905, 1 Ch. 620. Sed quære.
(q) Oliver v. Court, (1820) 8 Pr. 127, 160; Sug. 14th ed. 688.
(r) Killick v. Flexney, (1792) 4 B. C. C. 161; Watson v. Toone, (1820) 6 Mad. 153; Baker v. Bead, (1854) 18 Beav. 398; Smedley v. Varley,
It was pointed out by Lindley, L. J., in Farrar v. Farrars, Ltd. (t), that "a mortgagee with a power of sale, though often called a trustee, is in a very different position from a trustee for sale. A mortgagee is under obligations to the mortgagor, but he has rights of his own which he is entitled to exercise adversely to the mortgagor. A trustee for sale has no business to place himself in such a position as to give rise to a conflict of interest and duty. But every mortgage confers upon the mortgagee the right to realise his security and to find a purchaser if he can; and if in exercise of his power he acts in good faith, and takes reasonable precaution to obtain a proper price, the mortgagor has no redress, even though more might have been obtained for the property if the sale had been postponed." A mortgagee cannot purchase under the power, either alone or with others, or through a trustee for himself, for such a sale would be no sale at all; and a power of sale does not authorise ,the donee of the power to take the property subject to it at a price fixed by himself (u); nor can his agent, who has acted in surveying the property and receiving the interest, purchase on his own account from the mortgagee (x), though it seems that the solicitor of the mortgagee, if not acting as solicitor in the matter at the date of sale, may purchase from the mortgagee (y). But the mortgagee. can purchase the equity of redemption from the mortgagor (z), the purchase being from its inception a transaction subsequent to the loan. A 6econd mortgagee can purchase from a first mortgagee selling under his power of sale (a), even though the second mortgage may be in the form of a trust for sale (b); and a mortgagee can sell to a company in which he is a shareholder (c), or to one of the mortgagors under a mortgage by tenants in common (d).