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In Worthington v. Morgan, Corbett agreed to purchase an estate for £1400, of which £400 was to be paid on the completion of the purchase, and the residue to be secured by a mortgage of the estate agreed to be purchased. The estate was conveyed to Corbett, who paid £400 as agreed, but neglected to execute any mortgage to secure the residue of the purchase-money. Neither the title-deeds nor the conveyance to Corbett were delivered to him by the vendors. After a lapse of three years, a mortgage was executed by Corbett to the plaintiffs, his vendors ; but in the interval he had mortgaged the estate to Morgan without the knowledge of the plaintiffs. It was admitted that neither Morgan, nor any person in his behalf, investigated the title to the estate, or required to see the title-deeds or the conveyance to Corbett. The Vice-Chancellor of England remarked, that he entirely acquiesced in what was said by the Lord Chancellor in Allen v. Knight, but the case was quite different from that. The Vice-Chancellor held that the lien of the plaintiff's was unaffected by Morgan's mortgage, on the ground that it was the duty of Morgan to ask for the deeds.
“The law, therefore, as I collect it from the authorities," said V. C. Turner in Hewitt v. Loosemore, “stands thus :—That a legal mortgagee is not to be postponed to a prior equitable one, upon the ground of his not having got in the title-deeds, unless there be fraud, or gross and wilful negligence to the mortgagee, if he has bona fide inquired for the deeds, and a reasonable excuse has been given for the non-delivery of them; but that the court will impute fraud, or gross and wilful negligence, to the mortgagee if he omits all inquiry as to the deeds. And I think there is much principle both in the rule and the distinctions upon it. When this court is called upon to postpone a legal mortgagee,
its powers are invoked to take away a legal right; and I see no ground which can justify it in doing so, except fraud, or gross and wilful negligence, which in the eye of this court amounts to fraud; and I think that, in transactions of sale and mortgage of estates, if there be no inquiry as to the titledeeds, which constitute the sole evidence of the title to such property, the court is justified in assuming that the purchaser or mortgagee has abstained from making the inquiry, from a suspicion that his title would be affected if it was made, and is therefore bound to impute to him the knowledge which the inquiry, if made, would have imparted. But I think, that where boná fide inquiry is made, and a reasonable excuse given, there is no ground for imputing the suspicion, or the notice which is consequent upon it."
In Hewitt v. Loosemore, the facts were, that John Loosemore, the legal mortgagee, who was a farmer, unacquainted with legal
VOL. VII. NO. XIV.
fornis, upon the indenture of mortgage being handed to him, inquired of Robert Loosemore, the mortgagor, whether the lease ought not to be delivered to him as well. Robert Loosemore replied that it should ; but that, as he was rather busy then, he would look for it, and give it to John when he next came to market.
Turner, V.C., applying the principles he had enunciated to this particular case, was of opinion that a sufficient case for postponing John Loosemore had not been made out.
Lord Chelmsford, in his judgment in the case of Espin v. Pemberton, observed that it was said that the doctrine thus laid down by Turner, V.C., was new, and that the decision had not given satisfaction to the profession; but Lord Chelmsford thought that the judgment was consonant with the prior decisions. His lordship then said—“ That the inquiry made by Browne precluded the possibility of supposing that he abstained from all inquiry for fear of hearing something adverse to the title, and the answer which he received was a sufficient excuse to induce him not to prosecute his inquiries further. The case, indeed, bears a singular resemblance in all respects to the case of Plumb v. Fluitt, which has been followed in the various cases cited in Hewitt v. Loosemore. It is said that this case is of great importance to the commercial world, and that the doctrine which it așserts will alarm bankers and others who have advanced their money upon the deposit of deeds, and that they will be rendered liable to have their securities affected by secret assignments ; but the only effect of such a doctrine, if it were new, would be to prevent persons obtaining advances of money with such facility upon the deposit of their deeds, and whether any great mischief would arise from a check being put upon equitable mortgages of this description may be extremely questionable. The law, however, has been settled for a great number of years, at least from the time of Plumb v. Fluitt, which is now sixty years ago, and it has not been found that it has rendered persons unwilling to advance money upon such securities. But considerations such as these can have no effect, unless to prevent any new rule of law being laid down; and, whatever the consequences may be, I am bound by the prior decisions, and I am only following the uniform course of them when I arrive at the conclusion, that there is no such gross neglect on the part of Browne in not pursuing the inquiry he had made, as would induce the presumption of notice of the plaintiff's incumbrance.”
In Espin v. Pernberton, no reference was made to the case of Atterbury v. Wallis (25 L. J., ch. 792), in which the facts were as follows :-In 1835 Parsons conveyed to Lampray, a solicitor, hereditaments in Warwick and other hereditaments, by way of
mortgage to secure £450, subject as to the hereditaments in Warwick to a prior mortgage to Warder. In 1838 Lampray assigned by way of mortgage to certain persons (represented at the time of the suit by Atterbury), amongst other sums, the debt of £450, and all deeds, &c., relating to the same. In 1839 Warder, Lampray, and Parsons joined in a mortgage of the Warwick property to Wallis, in which no mention was made of the security effected by Lampray in 1838 ; but Lampray covenanted to produce the mortgage of 1835. Atterbury alleged that Lampray had acted as the solicitor of all parties on the occasion of the mortgage to Wallis, and charged him with notice of the assignment of 1838, and with negligence in not requiring the delivery or production of that deed. Wallis, who was a farmer, denied that he had employed Lampray as his solicitor, and stated that he had employed no solicitor at all; he was ill at the time, and had left the matter to his brother, a corn-dealer, who, as well as Lampray, had since died. There was no evidence produced from Lampray's books to show that he had acted as Wallis's solicitor. The Master of the Rolls held that there was not sufficient evidence for treating Lampray as Wallis's solicitor, and that Wallis had not been guilty of culpable negligence, as charged. Sir John Romilly was of opinion that if a solicitor had forborne to ask for the production of the mortgage deed of 1835, but had been satisfied with a statement made by the mortgagor that it included other property, and that therefore it could not be delivered
that would not have been such conduct as to fix the solicitor necessarily with notice that the mortgage had been assigned. This opinion of the Master of the Rolls is certainly somewhat inexplicable. We do not see why a deed should not be produced because it cannot be delivered up. If Wallis, before taking a release of Lampray's mortgage, had insisted upon the production of the deed, he must necess
essarily have found out that it was in the hands of some other person, unless indeed Lampray should have managed by fraud to gain possession of the deed for a time, as was the case in Peter v. Russell (1 Eq. Ca. Abr. 321).
The Lords Justices, however, were of opinion that Lampray did act as Wallis's solicitor, and that this connection affected Wallis with notice, and consequently the question of negligence, in not requiring production of the mortgage deed of 1835, was not decided by their lordships; but the Lord Justice Turner. nevertheless referred to. Hewitt v. Loosemore, and said that he continued of the same opinion as he had expressed in that case with respect to the necessity of making inquiry about deeds.
What amount of negligence will be considered by the court as gross and culpable negligence, depends upon the circumstances of each case. Thus Lord Cranworth, in Ware v. Lord Egmont
(4 De G., M. & G., 473), observed that where a person has not actual notice, he ought not to be treated as if he had notice, unless the circumstances are such as enable the court to say, not only that he might have acquired, but also that he ought to have acquired, the notice with which it is sought to affect himthat he would have acquired it but for his gross negligence. “The question,” proceeded his lordship, “ when it is sought to affect a purchaser with constructive notice, is not whether he had the means of obtaining, and might by prudent caution have obtained, the knowledge in question, but whether the not obtaining it was an act of gross or culpable negligence. It is obvious that no definite rule as to what will amount to gross or culpable negligence, so as to meet every case, can possibly be laid down."
The following cases, not cited in Espin v. Pemberton, relate to the question of negligence: - Whitbread v. Jordan (1 Y. & C.), Eq. Éxch., 303); Waldon v. Sloper (1 Drew, 193); Rice v. Rice (2 Drew, 73); Jones v. Williams (5 W. R., 775); Roberts v. Croft (5 W. R., 773, S. C. in App., 27, L. J. Ch., 220); Colyer v. Finch (19 Beav, 500; S. C. in App., 5 H. L. Cas., 905; 26 L. J. Ch., 65); and Perry-Herrick v. Attwood (27 L. J. Ch., 121).
The onus of proving gross negligence lies on the person who seeks to postpone the prior or legal incumbrancer. - Carter v. Curter (3 K. and J., 617).
That Lord Chelmsford and V. C. Kindersley, in Espin v. Pemberton, followed the current of authority, cannot we think be doubted, for Browne could not be said to have been guilty of gross negligence. Nor was any new doctrine laid down in
v. Pemberton. The rule that nothing short of gross negligence will postpone a legal mortgage without the title-deeds, was stated by Lord Cranworth in Colyer v. Finch, and again in Perry-Herrick v. Attwood, to have been established beyond a doubt. That such should be the rule is however, we think, to be regretted. L. C. B. Eyre, in Plumb v. Fluitt, and Lord Eldon, in Evans v. Bicknell, remarked, that they should have been glad to find the rule the other way; and Lord Cranworth, in PerryHerrick v. Attwood, observed, that in his opinion the rule often led to great hardship. Lord Eldon thought, if those cases were excepted in which, from the nature of the title, the deeds might be honestly out of the possession (as, for instance, in cases of joint tenancy and tenancy in common), such a rule as laid down by Mr. Justice Buller (and to which we have referred above), would avoid a great deal of fraud in mortgage titles, “ upon which,” added Lord Eldon, “this observation arises—that no man can tell when he is perfectly secure.”
On the other hand, both Lord Chelmsford and V. C. Kin
dersley seem to think it questionable whether any mischief would arise from a check being put upon equitable mortgages by deposit. We cannot but think that the general opinion will, in this respect, be opposed to that of those learned judges. Any check of this kind, which would prevent commercial men from obtaining advances on sudden emergencies at a moment's notice, cannot, to use the words of the Registration Commissioners in their report of 1857, be contemplated in a great commercial country without apprehension and alarm.
How far the questions considered in Espin v. Pemberton may be affected by the clause relating to notice in Lord St. Leonards' bill? to amend the law of propertyi, s not quite clear. The clause referred to is to the effect, that no bona fide purchaser for valuable consideration, or mortgagee, shall be bound by any other than actual notice of a charge affecting property. Now, the late Vice-Chancellor of England held, that “notice to a solicitor was actual notice to the client.”—Tunstall v. Trappes (3 Sim. 307). If this be upheld, then it is clear that the first question considered in Espin v. Pemberton will not be affected by the clause alluded to.
With respect to the second question, it remains to be seen whether courts of equity will give up their jurisdiction in cases of gross negligence, amounting to what the Courts may deem to be fraud. But if the effect of this clause in Lord St. Leonards' bill be to render it perfectly immaterial whether a purchaser, without actual notice of a charge, inquire after the deeds or not, so as to render equitable mortgages by deposit impossible, then the result must be contemplated with “ apprehension and alarm.”
2. JACKSON v. FORSTER. 28 L. J. Q. B., 166. (Confirmed
on Appeal, 7 W. Rep., 578, 18th June, 1859.) What is a bona fide assignment for valuable consideration of a Life Policy ?
In Hilary Term of the current year, two cases relating to the contract of Insurance were argued and decided in the Court of Queen's Bench, which, amongst other things, serve to shew that the language employed by insurance offices on this branch of the law is in a very imperfect state ; considering the importance of insurance to commerce, and the extent to which the practice of insuring now enters into all the business of modern life, these cases deserve attention.
The first case we shall refer to is that of Jackson V. Forster (28 L. J., 166, Q.B., confirmed in Error). The condition in
1 The bill has passed the House of Lords, but has not yet (20th July, 1859) finished its career in the Commons.