may protect himself by absence of notice, although, if ejectment were brought against him, he would be compelled to rely on a deed which would have given him notice that he had no title (c). A purchaser for valuable consideration without notice can give a good title to a purchaser from him with notice (d). The only exception is that a trustee who has sold property in breach of trust or a person who has acquired property by fraud cannot protect himself by purchasing it from a bona fide purchaser for value without notice (e).

between

equitable

6. The question of purchase for valuable consideration Rule as without notice does not arise as between rival equitable claimants. A court of equity does not (as a rule) grant claimants. direct relief to one as against another of competing equitable claimants. It merely decides that one of them has a preferential right to a transfer of the legal title, and, in so deciding, it necessarily negatives the right of the other or others. For instance, A. grants a legal mortgage of land to B. and then grants equitable mortgages to C., D., and E. successively. If C. seeks to redeem B. and to obtain a reconveyance of the legal estate, he must at the same time (according to the practice of the court) foreclose D., E., and A. Now, a suit for foreclosure is not a suit for equitable relief (ƒ). C.'s suit for foreclosure against D., E., and A. is merely a demand that they shall then and there exercise their right to obtain relief against the legal title. The only relief which C. asks is against B., the legal mortgagee, but the court before it gives that relief must ascertain which of the three, C., D., or E., has the best

but this is only because the purchase money was never paid until the conveyance was executed (Woodford v. Parkhurst (1638), Duke on Charitable Uses, 70; More v. Mayhow (1663), 1 Ch. Cas. 34; Attorney-General v. Gower (1736), 2 Eq. Abr. 685, pl. 11; Wigg v. Wigg (1739), 1 Atk. 382; Fitzgerald v. Burk (1742), 2 Atk. 397; Story v. Lord Windsor, supra; Tenison v. Sweeny (1844), 1 Jo. & Lat. 710, p. 714).

(c) Pilcher v. Rawlins, supra.

(d) East Greensted's Case (1633), Duke on Charitable Uses, 64; Case of Sutton Colefield (1635), Duke, 68; Lowther v. Carlton (1740), Barn. Ch. 358; Sweet v. Southcote (1786), 2 B. C. C. 66 ; Barrow's Case (1880), 14 Ch. D. 432, p. 445; Ex parte Sandys (1889), 42 Ch. D. 98, p. 110. (e) Barrow's Case, supra.

f) Colyer v. Finch (1856), 5 H. L. Cas. 905, p. 921; Heath v. Crealock (1874), 10 Ch. 22, p. 31.

1

right to it. Again, a trustee in breach of trust grants an equitable mortgage of the trust property. If the cestui que trust seeks relief against the trustee by a conveyance of the trust estate, he seeks no direct relief against the mortgagee, but the court is obliged to adjudicate on the question which of the two, the cestui que trust or the mortgagee, is entitled to a conveyance of the trust estate; and, as a result of its determination, to declare the rights of the parties. Two views have been put forward of the principle upon which the court should act when it is called upon to determine rights as between rival equitable claimants. One is that in a question as between rival equities priority of time is the last consideration which should be resorted to. The question which of two or more contending equities has the better or best equity depends (according to this view) primarily upon the conduct, whether by act or omission, of each equitable claimant in relation to the other or others. Where all are equally innocent, where no one has been guilty of negligence, misrepresentation or fraud, which has induced the creation of another equitable title, where no one has taken with knowledge or notice of another equitable title, then, for want of a better criterion, the court is obliged to determine their priority by the order in time at which their titles arose. This is the view of KINDERSLEY, V.-C., in Rice v. Rice (g). The other view, which is supported by the great mass of authority, is that the priority of equitable titles as between themselves is determined primâ facie by the priority in time of their creation (h); but that this priority may be diplaced by acts or omissions on the part of an earlier equitable claimant. Whenever the legal estate," said Lord HARDWICKE (i), "stands out either in a prior incumbrancer or in a trustee, as against whom a puisne incumbrancer has not the best right to call for the protection of it, the whole

(a) (1853), 2 Drew. 73.

(h) It should be remembered that where a fund is in the hands of trustees, the priority of assignments by a cestui que trust is governed by the order in time at which notice of the assigment is given to the trustee. See p. 182.

() Willoughby v. Willoughby (1755), 1 Coll, Jurid. 337, p. 363; 1 T. R. 763, p. 773.

is in equity; and then, qui prior est in tempore, potior in jure." "Questions of priority between equitable incumbrancers," said TURNER, L.J. (k), " are in general governed by the rule qui prior est tempore potior est jure, and in determining cases depending on the rule we must of course look at the principle on which the rule is founded. It is founded, as I conceive, on this principle, that the creation or declaration of a trust vests an estate and interest in the subject-matter of the trust in the person in whose favour the trust is created or declared. Where, therefore, it is sought. . . to postpone an equitable title created by declaration of trust, there is an estate or interest to be displaced. No doubt there may be cases so strong as to justify this being done, but there can be as little doubt that a strong case must be required to justify it." The same view was taken by Lord WESTBURY (1), and by the learned lords who advised the House in Shropshire Union Rails. Co. v. The Queen (m). In Newton v. Newton (n), a mortgage deed securing money which formed part of trust funds was deposited by the trustee with a bank to secure his private debt. The priority of the cestuis que trust was established, and the deed ordered to be delivered up. In Cave v. Cave (0), the sole trustee of a marriage settlement misapplied the trust funds in the purchase of land, the conveyance being taken in the name of his brother. The brother granted a legal mortgage of the estate to A. and an equitable mortgage to B. Neither A. nor B. had any notice of the trusts. The cestuis que trust under the marriage settlement were posponed to A., but given priority over B. In Shropshire Union Rails. Co. v. The Queen (p), A. was registered in the books of a railway company as the holder of shares, and had possession of the certificates. He was trustee of the shares for the company. He deposited the certificates of the shares with B. as security for a debt, and gave a

(k) Cory v. Eyre (1863), 1 D. J. S. 149, p. 167.

(1) Phillips v. Phillips (1862), 4 1). F. & J. 208, p. 215.

(m) (1875), L. R. 7 H. L. 496. See the language of Lord CAIRNS at p. 506, Lord HATHERLEY at p. 512, and Lord O'HAGAN at p. 514.

(n) (1868), 6 Eq. 135; 4 Ch. 143.

(@) (1880), 15 Ch. D. 639.

(P) (1875), L. R. 7 H. L. 496.

Effect of estoppel on equitable claimants.

memorandum agreeing to execute a legal mortgage. Subsequently he gave B.'s executrix, after she had notice of the trust, a formal deed of transfer, which the company refused to register. The House of Lords refused to grant a mandamus to compel the company to register the transfer.

7. The normal priority of equitable claimants may be displaced by an application of the doctrine of estoppel, If the owner of the prior equitable title by conduct or by negligence induces a person to change his position and to acquire for valuable consideration a title later in time in the belief that there is no earlier title, he is estopped, as against that person, from setting up his prior equitable title. The doctrine of estoppel will be discussed at length in Part IV. of this Treatise. One class of cases, however, to which that doctrine applies requires to be alluded to here, as it is sometimes cited as an illustration of the protection which is given to a purchaser for valuable consideration without notice (r). If A. conveys property to B. under circumstances which entitle A. to set aside the conveyance in equity, A. gives B. an apparent title to the property conveyed larger than his real title. If C. purchases the property from B., or lends money to B. on the security of the property, in the bond fide belief that B.'s real interest is co-extensive with his apparent interest, it would be unjust that C. should suffer from the claim of a person who has given B. the opportunity of holding himself out to the world in a character which did not belong to him. It is therefore settled that A.'s right in the case supposed to recover the property from B. is subject to C.'s claims. This doctrine is not based on the protection given to a purchaser for valuable consideration without notice; nor is it confined to persons who in strictness come within that designation (s). An attempt was made in Shropshire Union Rails. Co. v. The Queen (t) to extend the

(r) E.g. by Lord WESTBURY in Phillips v. Phillips, supra, p. 218. (8) Earl of Aldborough v. Trye (1840), 7 Cl. & F. 436, p. 463; Garrard v. Frankel (1862), 30 B. 445; Bainbrigge v. Browne (1881), 18 Ch. D. 188.

(t) Supra. See also Cory v. Eyre, supra, p. 169.

principle of estoppel to another class of cases. In that case a cestui que trust who was absolutely entitled to railway shares allowed them to stand in the name of a single trustee, and entrusted him with the custody of the certificates; and it was urged that the cestui que trust was bound not merely by a valid legal transfer of the shares by the trustee, but also by any equitable dealing or contract which the trustee might choose to enter into. The House of Lords rejected this contention.

tabula in

8. There is a second exception to the rule that, as between Doctrine of equitable claimants, priority of time gives priority of right. naufragio In some cases a later equitable claimant may protect him- stated and illustrated. self against a prior equitable claimant by getting in the legal estate subsequently to the creation of his own title, and after he has notice of the prior title. "As courts of equity break in upon the common law," said Lord HARDWICKE (u), "where necessity and conscience require it, still they allow superior force and strength to a legal title to estates; and, therefore, where there is a legal title and equity on one side, this court never thought fit that, by reason of a prior equity against a man who had a legal title, that man should be hurt, and this by reason of that force this court necessarily and rightly allows to the common law and to legal titles." "There is nothing more familiar," said Lord SELBORNE (x), "than the doctrine of equity that a man who has bonâ fide paid money without notice of any other title, though at the time of the payment he, as purchaser, gets nothing but an equitabie title, may afterwards get in a legal title, if he can, and may hold it; though during the interval between the payment and the getting in the legal title he may have had notice of some prior dealing inconsistent with the good faith of the dealing with himself." If A. creates a legal mortgage in favour of B. and equitable mortgages in favour of C. and D. successively, C. is prima facie entitled to redeem B. in priority to D. If D., however, before C. institutes a suit

(u) Wortley v. Birkhead (1754), 2 Ves. sen. 571, p. 574.

(x) Blackwood v. London Chartered Bank of Australia (1874), L. R. 5 P. C. 92, p. 111.