Page:Harvard Law Review Volume 1.djvu/13

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If, therefore, the owner of land, after creating an equitable incumbrance in favor of A, should subsequently give C an equitable mortgage by a deposit of the title-deeds, A could not compel the surrender of the deeds by C, if the latter had no notice of the prior incumbrance.[1] Nor has the Judicature Act affected the rights of such a pledgee.[2]

An honest purchaser will, furthermore, be protected, although he did not obtain the legal title at the time of his purchase, if he did acquire at that time an irrevocable power of obtaining the legal title upon the performance of some condition, and that, too, although, before performance of the condition, he received notice of the prior equitable claim. Thus, if a trustee, in violation of his duty, should sell the trust property to one who had no notice of the trust, and should deliver the deed in escrow, the defrauded cestui que trust could not restrain the innocent purchaser from performing the condition, nor could he obtain any relief against him after he had acquired the title.[3] On the same principle one who acquired at the time of his purchase an irrevocable power of obtaining the legal title upon the performance of some act by a third party, which that party is in duty bound to perform, will be as fully protected as if he had acquired the title itself at the time of his purchase. Hume v. Dixon[4] is a case in point. The owner of land subject to a vendor’s lien sold it to an innocent purchaser; but, under the law of the State, the deed failed to convey the legal title, for the reason that the officer who took the acknowledgment of the deed forgot to sign his name thereto. He subsequently signed the deed, but after the grantee had notice of the lien. The purchaser was protected. Another illustration is furnished by Dodds v. Hills.[5] A trustee of shares in a company wrongfully pledged them, transferred the certificates, and executed a power to the innocent lender to register himself as owner of the shares. The transfer was registered after the lender was informed of the breach of trust.

  1. Joyce v. De Moleyns, 2 J. & Lat. 374; Thorpe v. Holdsworth, 7 Eq. 139. Sir John Romilly’s decision in Newton v. Newton, 6 Eq. 135, is, therefore, not to be supported. See, further, S. C. on appeal, 4 Ch. 143; Stackhouse v. Countess of Jersey, 1 J. & H. 721.
  2. Re Morgan, 18 Ch. Div. 93.
  3. Dodds v. Hills, 2 H. & M. 424, 427, per Wood, V. C.
  4. 37 Oh. St. 66. See also Buck v. Winn, 11 B. Mon. 320, 323.
  5. 2 H. & M. 424.