This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
Outstanding legal estate, and a subsequent purchaser for value without notice procures, at the time of his purchase, the person in whom the legal title is vested to declare himself a trustee for him, or even to join as party in a conveyance of the equitable interest, (although he may not formally convey or declare a trust of the legal estate), still the subsequent purchaser gains priority."29 So a bona fide purchaser is protected as against a prior equity, if he has the legal title conveyed to another instead of to himself, he having in such case the right to call for a conveyance of the legal title.30 Under what other circumstances this doctrine of the "best right" might become applicable in favor of the holder of the subsequent equity does not clearly appear from the cases.31 In one case in this country it was regarded as protecting a subsequent purchaser as against a prior equity by reason of the fact that such purchaser had a right, under his contract, to demand a conveyance.32
(U. S.) 260; Overall v. Taylor, 99 Ala. 12, 11 So. 738; Taylor v. Weston, 77 Cal. 534, 20 Pac. 62; Johnson v. Hayard, 74 Neb. 157, 5 L. R. A. (N. S.) 112. ,2 Ann. Cas. 800, 103 N. W. 1058, 107 N. W. 384; Jenkinson v. New York Finance Co., 79 N. J. Eq. 247, 82 Atl. 36; Peabody v. Fen-ton, 3 Barb. Ch. (N. C.) 451; Bonelli v. Burton, 61 Ore. 429. 123 Pac. 37; Labelle Coke Co. v. Smith, 221 Pa. 642, 70 Atl. 894; Craig v. Leiper, 2 Yerg. (Tenn.) 193, 24 Am. Rep. 479; National Oil & Pipe Line Co. v. Teel, 95 Tex. 586, 68 S. W. 979; Wilson v. Morrell, 5 Wash. 654, 32 Pac.
733; Lowther Oil Co. v. Miller-sibley Oil Co., 53 W. Va. 501, 97 Am. St. Rep. 1027, 44 S. E. 433.
16. Phillips v. Phillips, 4 Dc G., F. & J. 208, per Lord West-bury.
17. Pinkett v. Wright, 2 Hare,
18. Rice v. Rice, 2 Drew. 73; Heyder v. Excelsior Building &. Loan Ass'n, 42 N. J. Eq. 403, 59 Am. Rep. 49, 8 Atl. 310; Hume v Dixon, 37 Ohio St. 66; Wilson v. Hicks, 40 Ohio St. 418; St. Johnsbury v. Morrill, 55 Vt. 165.
19. 2 Pomeroy, Eq. Jur. Sec.Sec. 686, 779-782.
The general rule being, as above stated, that as between equal equitable interests or claims the one prior in time will prevail, a qualification of this rule has been suggested by high authority, to the effect that the equities should be against the same person, and that if against different persons, the subsequent equity should be protected in favor of one who acquires it bona fide for value, just as if it were a legal title. In other words, that, as a purchaser for value of a legal title, without notice of an equity in favor of another. takes free of the equity, so a purchaser for value of an equitable title, without notice of a "subequity" in favor of another, should take free from such sub-equity.23 - 24 Under the view suggested, for instance, if
20. Bayley v. Greenleaf, 7 Wheat. (U. S.) 46, 57, 5 L. Ed. 39:t; Hume v. Dixon, 37 Ohio St. 66; Campbell v. Sidwell, 61 Ohio St. 179, 55 N. E. 609. See Gox v. Romine, 9 Gratt. (Va.) 27.
21. See 2 White & Tudor's
Leading Cases in Equity (8th Ed.) 104 ei seq.
22. See Mr. Knurl's ingenious and suggestive discussion, in his work on Estoppel, pp. 251-294.
23-24. Profe or J. B.ames, in 1 Harv. Law Rev. at p. 8,
A, having an equitable interest, such as an equity of redemption, or the beneficial interest under a trust, agrees to hold his interest for the benefit of B, or, as having acquired such interest from B by fraud, holds it under a constructive trust for B, and A subsequently conveys his equitable interest to a purchaser for value, without notice of B's claim, the latter would take free from such claim. In such a case the personal right in favor of B against A to enforce a trust is not in its nature exclusive of a like personal right in favor of the purchaser against the legal owner, and consequently there would seem to be no reason that the former, though earlier in time, should exclude the latter, though such rights against the same person in regard to the same land are necessarily exclusive one of the other, and consequently it is proper to prefer the one which was first acquired. This view, it has been remarked,25 conforms in principle with the doctrine, more generally accepted in this country, that the assignee of a chose in action, for value and without notice of equities in a third person, takes free of such equities.26 It has, however, been criticized, and is probably contrary to the weight of judicial authority.27
It has been not infrequently stated that if the holder of the subsequent equity, having acquired it for value and without notice of the prior equity, has the "best right" to call for the legal estate, he is to be protected as if he had actually acquired such estate.28 "It has accordingly been held that if a purchaser for value takes an equitable title only, or omits to get in an
Lectures on Legal History at p. 263. See Editorial notes, 12 Columbia Law Rev., pp. 155-158; 24 Harv. Law Rev. at p. 490.
25. Editorial note, 24 Harv. Law Rev. at p. 491.
26. Post, Sec. 630(b).
27. See article by Professor Thaddeus Kenneson, 23 Yale Law Journ. at p. 205 et seq.; Huston,
Enforcement of Decrees in Equity, 116-124, 144.
28. Wilkes v. Bodington, 2 Vern. 599; Wilmot v. Pike, 5 Hare, 14; Hume v. Dixon, 37 Ohio St. 66; Dueber Watch Case Mfg. Co. v. Dougherty, 62 Ohio St. 589, 596, 57 N. E. 455; St. Johns-bury v. Morrill, 55 Vt. 165; Preston v. Nash, 76 Va. 1.
Even though a bona fide purchaser has not acquired the legal title, he stands in the same position as if he had done so, as regards a prior equity, if he has power to acquire the legal title by performing some act, without arty action on the part of the holder of such title, as, for instance, when he is given an express and irrevocable power to transfer the property to himself or another.33
29. Stirling, L. J., in Taylor v. London and County Banking Company (1901) 2 Ch. at p. 261.