« PreviousContinue »
Pemberton was not the solicitor of Browne in the assignment, and there is not only no proof of consent that he should act in that capacity, but something approaching to a proof of the contrary.”
It is necessary, for the clear understanding of this case, that the cases of Kennedy v. Green, and Hewitt v. Loosemore, should be somewhat fully referred to.
In the first of those cases, Bostock, a solicitor, obtained by fraud the execution of a deed by a Mrs. Kennedy, purporting to be an assignment to himself of a mortgage of a leasehold property, and subsequently purchased the equity of redemption. Sometime afterwards he purported to assign this property, by way of mortgage, to his father-in law, Kirby. In the mortgage transaction between Bostock and Kirby, the latter employed no solicitor other than Bostock. Sir John Leach, MR., heid, that Bostock must be considered as the solicitor of Kirby, and that it was impossible for him, under these circumstances, to deny notice [i. e., legal and constructive notice] of the fraud committed upon Mrs. Kennedy. The cause was reheard before Lord Brougham, C., who said, “ Bostock was acting as Mr. Kirby's solicitor in the transaction, and although, generally speaking, the knowledge obtained by a man's attorney or agent fixes himself, if obtained while so employed and on the same business,
yet it cannot here be said that Mr. Kirby is fixed with all which Bostock knew ; for the fraud practised by Bostock upon Mr. Kirby himself, was of course concealed from him; and so we may say would certainly be that other fraud which he had practised on Mrs. Kennedy. Indeed, that was only another part of the same fraud, another act of the same plot; and therefore I think we cannot, on this account alone, fix his client, Mr. Kirby, any more than his other employer, Mrs. Kennedy, with the knowledge of his criminal proceedings. We must lay out of our view all the knowledge, the actual and full knowledge, he had of his own fraud, and are not to hold Mr. Kirby as cognisant-I mean, of course, cognisant in law and constructively-of that, merely because his solicitor, himself the contriver, the actor, and the gainer in the transaction, knew it all well.”
In Hewitt v. Loosemore, Robert Loosemore, a solicitor, deposited a lease with Hewitt for securing a sum of money, and signed and delivered to Hewitt a memorandum that it was deposited for that purpose. Afterwards, Robert Loosemore assigned the lease to John Loosemore, who had no actual notice of the former security by way of mortgage. John Loosemore employed no solicitor in this transaction, and Robert Loosemore prepared the assignment at his own expense. Upon the ques
tion, whether Robert Loosemore must be taken to have acted as the solicitor of John in the transaction of the mortgage, and whether, therefore, John had notice through Robert of the lease having been deposited with Hewitt, Turner, V.C., made the following observations :-"I think that where a mortgagor is himself a solicitor, and prepares the mortgage deed, the mortgagee employing no other solicitor, the mortgagor must be considered to be the agent or solicitor of the mortgagee in the transaction of the mortgage. The mortgagee in such cases trusts the mortgagor to discharge those duties which his own solicitor would discharge, if he thought proper to employ one; and it can make no difference that the mortgagor is not paid by the mortgagee—the very nature of the transaction being, that all the expenses are borne by the mortgagor. I am of opinion, therefore, that Robert Loosemore must be considered to have been the agent and solicitor of the defendant in the transaction of his mortgage; but I do not think that the defendant is therefore to be considered to have had notice of the plaintiff's deposit; such notice woull be constructive merely, and constructive notice is knowledge which the court imputes to a party, upon a presumption so strong that it cannot be allowed to be rebutted, that the knowledge must have been communicated; and I cannot act upon such a presumption in the face of the evidence which the plaintiff himself has adduced. In determining this point in favour of the defendant, I desire it to be understood that I do not proceed upon the case of Kennedy v. Green. The well-founded and wholesome limitation upon the doctrine of constructive notice established by that case, does not appear to me to apply to the present. There was here no fraud in the original deposit with the plaintiff, and no fraud in the mortgage to the defendant, if the fact of the deposit with the plaintiff was communicated; and it would, I think, be a misapplication of the case of Kennedy v. Green, to hold that the fact of the deposit must be taken not to have been communicated, because it was a fraud to conceal it. So to apply the case would be, in trying the question, whether there were knowledge or not, to assume that there was fraud.”
In considering the question of constructive solicitorship, both Vice-Chancellor Kindersley and Lord Chelmsford seem to have overlooked the fact that the mortgage deed is, we may say, invariably prepared by the mortgagee's solicitor. Now, 'if the intended mortgagee were, as supposed by the Vice-Chancellor, a retired solicitor, or a barrister - who could take care of himself," he ought, if he act for himself, to prepare the deed; but if he should think proper to permit the mortgagor's solicitor to prepare the same, we cannot see why "it would be very hard to say,''
in the event of their being no evidence to the contrary, that the mortgagor's solicitor must be considered as having acted for both parties.
With respect to the second question, Kindersley, V.C., observed, that no doubt the rule was, that where there was a subsequent mortgagee, though he had no notice of the prior mortgage, if he did not get in the title-deeds, then the court would consider that tantamount to a fraud, and that he had constructive notice of the prior mortgage; but in the present case his Honour thought there was sufficient reason for Browne not obtaining the titledeeds. “It appears that he did ask for them,” remarked the Vice-Chancellor; "in fact, they say he asked for them too much, and therefore they say he is charged with negligence in not making his requisitions more effectual; but he is a young man, the articled clerk of the mortgagor, who married his mother, and the stepfather says, 'You shall have the deeds as soon as I can get them, and he further says, 'you have got the assignment. There is nothing in this to make the young man guilty of fraud, or to shew that he was assisting Pemberton to commit a fraud. I cannot in this case come to the conclusion, that there is any such negligence or omission with regard to not procuring the title-deeds, as to lead me to say that the defendant is not entitled to his security.”
In deciding this question, the Lord Chancellor was governed by Hewitt v. Loosemore and the earlier cases. Some of these cases we will now briefly advert to. Buller, J., in Goodtitle y. Morgan (1 T. R., 762), observed that it was an established rule in equity, that a second mortgagee who had the title-deeds without notice of any prior incumbrance should be preferred, because, if a mortgagee lend money upon mortgage, without taking the title-deeds, he enables the mortgagor to commit a fraud. But Lord Chancellor Thurlow, in Tourle v. Rand (2 Bro. C.C. 652), remarked that it was to be wished that the cases in the Court of Chancery on which this opinion was grounded had been named, for he did not conceive that a first mortgagee not taking the deeds was alone sufficient to postpone him; and in Penner v. Jemmatt (2 Bro. C.C. 652, note), Lord Thurlow held that there must be a voluntary leaving of the deeds, to entitle the second mortgagee to have the prior mortgage postponed. In Evans v. Bicknell (6 Ves., 183), Lord Eldon observed that Mr. Justice Buller's proposition was not true, but did not wonder that it had been so stated; for in Ryall v. Rolle (1 Ves., 360; 1 Atk., 168), it is so stated by Mr. Justice Burnet, and without observation by the Lord Chancellor (Hardwicke), or the other learned persons (Lee, L. C. J., and Parker, L. C. B.), by whom the Chancellor was assisted, as being contrary to the law of the Court of Chancery.-(See also 4 Madd. 135.)
The general rule that nothing but fraud, or gross, or voluntary negligence in leaving title-deeds, will oust the priority of a legal mortgagee, was established in Plumb v. Fluitt (2 Anstr., 432). In that case, title-deeds were deposited with A. as a security for money; the property was then conveyed to B. by way of mortgage without notice of A.'s security. It came out in evidence that, on the mortgage being proposed, B. sent for the title-deeds; the mortgagor then said he could not give them to him, but promised to bring them in a few days. When the mortgage was to be executed, the mortgagor again excused himself for not bringing the title-deeds with him, but promised to send them next day, and two days after the mortgage was executed, he informed B. of A.'s security. Eyre, L. C. B., held that B. had not been guilty of such gross and voluntary negligence as would postpone him to A.
The doctrine established in Plumb v. Fluitt, was reasserted by Lord Eldon in Evans v. Bicknell (6 Ves., 190), and in Martinez v. Cooper (2 Russ., 98). It was assented to by Sir Wm. Grant in Barnett v. Weston (12 Ves., 133), and apparently by Sir John Leach in Harper v. Faulder (4 Madd., 138), who, however, did not there consider himself called upon to decide the general question ; it was followed by Lord Langdale in Farrow v. Rees (21 Beav., 18), and by Sir James Wigram and Lord Cottenham in Allen v. Wright (5 Hare, 272, and 11 Jur., 527; 16 L. J. Ch., 370.)
In Hewitt v. Loosemore, Turner, V.C., after referring to Plumb v. Fluitt, and the subsequent cases mentioned above, remarked :
“ It was said in the argument that the cases to which I have referred could not be reconciled with the decision in Jackson v. Rowe (2 S. and S., 472), with what fell from Lord Cottenham in Dryden v. Frost ( 3 My. and Cr., 673), and from Lord Langdale in Tylee v. Webb (6 Beav., 552), and with the determination of the late Vice-Chancellor of England in Worthington v. Morgan (16 Sim., 547). But upon examining those cases, I do not think they will be found inconsistent with Plumb v. Fluitt.”
In Jackson v. Rowe, Mrs Jackson, under the settlement made on the marriage of her parents, and an appointment made after her father's death by her mother, was entitled, subject to the life-interest of her mother, to an estate in fee. The title-deeds of the estate were kept by Mrs. Jackson's mother, who married a second time, and, pretending to be seized in fee, conveyed the estate in consideration of marriage to her second husband in fee. Here it was held that the second husband, like every other purchaser, was bound to use due diligence in the investigation of the title before he accepted the conveyance of the estate. With due diligence he must have discovered that his intended
wife had only a life estate. “In Jackson v. Rowe," said Turner, V.C. (9 Hare 457), “the question was not whether a prior equitable title could prevail against a subsequent legal one, but whether there was a good equitable defence against a prior legal title; and it did not appear that any inquiry whatever had been made about the title-deeds."
In Dryden v. Frost, Lord Cottenham observed, that “John Frost, the mortgagee, was in this case taking the title from a purchaser who was not in possession of the title-deeds. They were in the possession of the plaintiff, a circumstance which, according to the authority of Hiern v. Mill (13 Ves., 112), was of itself sufficient notice of the title of the party in possession of them.” The facts of the case of Dryden v. Frost do not appear from the report; but the facts in Hiern v. Mill were, that a purchaser for valuable consideration, though apprised that the title-deeds were in the hands of a third party, did not choose to inquire of him whether he had a claim upon the estate; and as Lord Cottenham, in Pryden v. Frost, referred to Hiern v. Mill as an authority, it is to be assumed that Frost, the mortgagee, had notice that the deeds were in the hands of Dryden, the plaintiff, “in which case," said Turner, V.C., in Hewitt v. Loosemore, “both according to Hiern v. Mill, and Birch v. Ellames (2 Aust., 427), and with reference to the doctrine of the court as to estates in the possession of tenants, he was bound to make further inquiry."
In Tylee v. Webb, Robert Webb, a copyholder, deposited the copy of the Court roll, shewing his admittance to the property in question, with Messrs. Tylee, as a security for money. Upon the death of Robert Webb, Thomas Webb, his son, was admitted tenant of the estate, and received a copy of the roll, dated 7th Nov., 1833, stating that Thomas Webb had been admitted as the only son and heir of Robert Webb, who held by copy of Court roll, dated 18th Dec., 1829. The copy of the 7th Nov., 1833, was deposited by Thomas Webb with Hinton, as security for money. Lord Langdale said, “I incline to think that Hinton, who knew that Thomas Webb had been admitted only in his character of heir of Robert Webb, and that Robert Webb had been admitted under copy of Court roll, dated 18th Dec., 1829, must be deemed to have known that Robert Webb, having that copy of Court roll, might have deposited it so as to create an equitable charge upon the estate, and consequently ought to have required its production before he advanced his money.” But as was observed by Turner, V.C., in Hewitt v. Loosemore, there was no question in Tylee v. Webb as to the legal estate. Messrs. Tylee and Hinton were both mere equitable mortgagees by deposit.