A mere volunteer was postponed to a subsequent equitable claimant for value without notice.
Stirling LJ said: ‘The ground of postponement relied on in this case is that the prior equitable claimants allowed Tasker to remain in possession of the title-deeds, including the mortgages to himself. There are undoubtedly cases (as, for example, Waldron v Sloper (1852)1 Drew. 193 and Farrand v Yorkshire Banking Co 40 Ch D 182), where an equitable mortgagee who has allowed his mortgagor to retain or regain possession of the title-deeds has been postponed to a subsequent equitable incumbrancer who has obtained possession of the deeds. But where the relation between the equitable incumbrancer and the person in possession of the title-deeds is not merely that of mortgagee and mortgagor, but is of a fiduciary nature (as, for example, that of cestui que trust and trustee, or client and solicitor), there is a great body of authority to show that the equitable incumbrancer is not to be deprived of his priority by reason of the improper acts of the person entrusted with the deeds, so long, at all events, as the incumbrancer has no ground to suppose that there has been any want of good faith on the part of the custodian of the deeds.
The leading authorities on this point appear to be Cory v Eyre (1863)1 DJ and s149, Shropshire Union Railways and Canal Co. v Reg. (1875) LR 7 HL 496, and In re Vemon, Ewens and Co (1886) 33 Ch D 402, before the Court of Appeal.’
Fry LJ said: ‘A distinction is to be drawn between two sets of circumstances, which at first sight look very similar. One class is where a mortgagee knows that the mortgagor has not fulfilled his obligations, and yet does nothing. The other is where the mortgagee does not know that the mortgagor has failed to fulfil his obligations, but knows only that there are obligations which he may in the future fail to fulfil, and yet takes no precautions against the consequences of his doing so. Instances of the first class are cases where the mortgagee, knowing that the mortgagor has the title deeds, neither receives them nor demands them from the mortgagor, or where the mortgagor has received them from the mortgagee for a particular purpose and does not return them when he ought to do. Layard v Maud Law Rep 4 Eq 397 is a case of this class. There was an agreement which bound the mortgagor to execute a mortgage and hand over the deeds in six months, and the mortgagee allowed eighteen months to elapse after the expiration of that period without making any inquiry. There was, therefore, to the knowledge of the mortgagee a default by the mortgagor in fulfilling his obligations.
The other class of cases is where the mortgagee has taken no precautions against future default by the mortgagor, no default having yet to the knowledge of the mortgagee taken place. I know of no decided case in which the mortgagee has been postponed on the ground that he did not take precautions against a future fraud by the mortgagor; and I do not know of any general rule whi
Judges:
Stirling LJ, Fry LJ
Citations:
[1901] 2 Ch 231
Jurisdiction:
England and Wales
Cited by:
Cited – R Griggs Group Ltd and others v Evans and others (No 2) ChD 12-May-2004
A logo had been created for the claimants, by an independent sub-contractor. They sought assignment of their legal title, but, knowing of the claimant’s interest the copyright was assigned to a third party out of the jurisdiction. The claimant . .
Lists of cited by and citing cases may be incomplete.
Equity
Updated: 23 June 2022; Ref: scu.199511