tract, and claiming not only the return of the deposit, together with interest and costs, charges and expenses, but also general damages. The deposit was duly returned to the company. But the question that called for decision was what damages they were entitled to because of the failure of the vendor's executors to perform the contract. Were the company to be paid general damages as claimed by them for the loss of the bargain, or was their claim to be restricted to the costs incurred by them in investigating the vendor's title to the property?

Decision of the Court.

Mr. Justice Sargant, in a considered judgment, made a careful review of the material authorities that have dealt with the subject of a vendor's failure to perform his contract owing to his inability to redeem a mortgage upon the property which he has agreed to sell. If the obligation of a vendor was confined simply to his doing all he can to complete the purchase, and if he has done his best he is not liable in case of failure, the matter for discussion would have been reduced to a very narrow compass. For in the present case it was not denied that had the vendor's executors possessed the means to redeem the mortgage on the property which their testator had contracted to sell, there would not have been the slightest difficulty in the way of the perform ance of the contract. But, as Mr. Justice Sargant had occasion to demonstrate by means of his analysis of the reported cases, the matter stood on an entirely altered footing because of the vendor's executors' inability to complete. And in the result his Lordship came to the conclusion that he was warranted in holding that where a vendor's incapacity to convey real estate which is subject to a mortgage is due to the mortgagee's refusal to release the property because of the vendor's inability to redeem the mortgage by paying it off, that is a defect of conveyance and not a defect of title, and gives rise to a claim by the purchaser for general damages. The costs of investigating the vendor's title is not the limit of the purchaser's rights.

Where Title is Defective Only. Where a vendor's title is defective only, and that alone accounts for his inability to com

plete the transaction, the position is totally different from what it is when there is defect of conveyance to be complained of. The purchaser will have to be content with nominal damages in such a state of affairs. Authority for that statement is furnished by the decision of the House of Lords in the renowned and oft-cited case of Bain v. Fothergill (L. R. 7 E. & I. App. 158). The reader is probably familiar with what was there laid down. But it will be convenient, for the purpose now in view, to recall it here: Upon a contract for sale and purchase of real estate, if the vendor, without fraud, is incapable of making a good title, the proposing purchaser is not entitled to recover compensation in damages for the loss of his bargain. All that he is entitled to recover are the expenses that he has incurred, but not damages beyond them.

The proposition above set forth is formulated in language closely similar to that used by Lord Chief Justice De Gray in the more than a century old case of Flureau v. Thornhill (2 Wms. Bl. 1078; see 1 Esp. 368). The decision in that case was adopted and affirmed by the House of Lords in Bain v. Fothergill (ubi sup.); while that in Hopkins v. Grazebrook (6 B. & C. 31) was overruled. The rule in the earlier of those cases, as to the limits within which damages may be recovered upon the breach of a contract for the sale of real estate, must be taken to be without exception, said Lord Chelmsford (L. R. 7 E. & I. App., at p. 207). His Lordship went So far as to add what, in his opinion, is the consequence of a person entering into such a contract knowing that he has not title to it, nor any means of acquiring it." The purchaser cannot, in an action for breach of the contract, recover anything beyond the expenses that he has incurred.

The existence of an incumbrance on real estate in the shape of a mortgage thereof is unlike a defect of title which is irremediable. Mr. Justice Sargant made that clear when his Lordship remarked, in the course of his judgment, that there is no special difficulty in obtaining a release of real estate that is in mortgage. For all that is required in general, and all that was requisite in the present case, was to pay off the mortgage or a sufficient part of it to satisfy the mortgagee.

The Courts have always treated somewhat leniently a vendor's ignorance of the existence of a defect in his title to property which he has contracted to sell, sharply distinguishing a contract for the sale of real estate from a contract for the sale of a chattel. To quote the words of Lord Hatherley on this point in Bain v. Fothergill (L. R. 7 E. & I. App., at pp. 210, 211): "In the purchase and sale of real estates, it is recognised on all hands that the purchaser knows on his part that there must be some degree of uncertainty as to whether, with all the complications of our law, a good title can be effectively made by his vendor; and taking the property with that knowledge, he is not to be held entitled to recover any loss on the bargain he may have made, if in effect it should turn out that the vendor is incapable of completing his contract in consequence of his defective title." As regards a contract for the sale of a chattel, on the contrary, "the vendor must know. at all events is taken to know, what his right to the chattel is," continued Lord Hatherley.

66

or

Anomalous as this rule may be for so it was befittingly characterised by Lord Lindley -Master of the Rolls, as he then was-in Day v. Singleton ([1899] 2 Ch. 320)-it is perfectly intelligible how it came into being, when the difficulties of showing a good title to real estate in this country are considered. All the same, it is a rule that is most properly to be restricted within narrow limits. It ought not, said Lord Lindley in the same case, to be extended to cases in which the reasons on which it is based do not apply. And as it originated by reason of the unavoidability of defects in title, confined to that notorious pitfall of the unwary it must be. Thus, wherever it is a matter of conveyancing and not of title, it is the duty of the vendor to do everything he is enabled to do" to compel others to concur in the conveyance. That was the view expressed by Lord Hatherley in Bain v. Fothergill (ubi sup.).

Authorities in Point.

In the present case, there was no suspicion of any defect in the vendor's title that created the difficulty in completing the transaction. It was solely because the mortgagees, not being paid off, declined to concur in the conveyance. Therefore, the principle of the deci

sion in Bain v. Fothergill (ubi sup.) was bound to be treated by Mr. Justice Sargant as inappropriate. The learned Judge was consequently constrained to turn to other reported decisions for guidance in the judgment that he ought to pronounce. And Engell v. Fitch (L. R. 4 Q. B. 659) and Day v. Singleton (ubi sup.) were selected by his Lordship as authorities having a distinct bearing on the question which he had to determine. As regards the former of those two authorities, his Lordship entertained no doubt that if the omission of the vendor to bring an action to dispossess the actual occupier had been due to lack of means, the decision would nevertheless have been precisely the

same.

It appeared that the defendants in that case, who were mortgagees, were in a position to have ousted by ejectment the mortgagor, who insisted upon remaining in possession of the property which the defendants had agreed to sell to the plaintiff under the power of sale which was contained in their mortgage deed. But they refused to complete the sale. It was decided by the Court of Appeal, affirming the decision of the Court of Queen's Bench, that as the breach of contract of which the plaintiff complained arose, not from inability of the defendants to make a good title, but from their not having taken the necessary steps to secure the possession of the property, the case did not come within the principle of Flureau v. Thornhill (ubi sup.). The plaintiff was held, therefore, to be entitled to recover, not only his deposit and the expenses of investigating the title, but also damages for loss of his bargain.

So, in the present case, the vendor's executors' incapacity to convey being due to the mortgagees' refusal to release and the pecuniary inability of the vendor's executors to pay off the mortgage, the intending purchaser had, in the opinion of Mr. Justice Sargant, according to the authorities, a valid claim for general damages, because of the defect of conveyance, and it was not limited to the costs of investigating the vendor's title to the property.

As regards Day v. Singleton (ubi sup.), that is mainly useful in its application to the present case on account of the observations therein of the then Master of the Rolls, to which we have above invited attention. The actual decision related to the assignment of

certain leasehold property for which a licence by the lessor was required to be given. The vendor's omission to do his best to obtain that licence was held by the Court of Appeal, reversing the decision of Mr. Justice Romer, to entitle the intending purchaser to damages beyond the return of the deposit with interest and expenses. But coupled with what was laid down in Engell v. Fitch (ubi sup.), Mr. Justice Sargant had no lack of authority in warranting him in coming to the conclusion. that he did in the present case.

The Principles of Priority.

Ir is proposed in this article to analyse the principles which control the rights of assignees of equitable interests in personal estates and choses in action. It is intended to compare the principles which underlie real estate and personal estate in relation to the operation of the maxim Qui prior est tempore, potier est jure, and to show that the principles are identical and only the nature of the properties different. We shall then examine several difficult decisions to be considered in practice, and, in relation to personal property, point out here and there a circumstance to be remembered whenever the practitioner finds himself in touch with the subject. First, then, we may review the decision which regulates the first kind of property mentioned-namely, Dearle v. Hall, decided by Plumer, M.R., in 1823, and affirmed, along with another case, Loveridge v. Cooper, by Lyndhurst, C., in 1828, and reported in 3 Russell, at pp. 1 et seq. Those cases briefly decide this: Where a beneficial owner of a sum of money, invested in the names of trustees, assigns that interest for valuable consideration to several assignees, the assignee who first gives notice to the trustees of his assignment has a better title or equity to receive the money than an assignee earlier in date who has omitted to give notice. A. has an interest in a trust fund. B. is trustee of the fund. A. assigns his interest first to C., then to D., and later to E. E. gives B. notice of the assignment. C. and D. either give no notice, or, if they do, after the notice given by E. E.'s assignment, though posterior in date,

is preferred to C.'s or D.'s. And this applies to all equitable interests in personal estate and choses in action, and "it is of no importance in the question as to the priority of title acquired under the assignments whether the interest of the vendor be vested or contingent, present or reversionary." present or reversionary." (See headnote of Dearle v. Hall, supra.) Now we are immediately brought to a consideration of the maxim above quoted: who is the first in time is first in right; or put differently, where the equities are equal the equity prior in point of time must prevail. (Capell v. Winter, [1907] 2 Ch. 376; and see also Re Samuel Allen, [1907] 1 Ch. 575.) That this canon applies to both equitable interests in real and personal estate is not controvertible. As regards realty, there can be no shadow of doubt that no incumbrancer, by giving any amount of notice, can get himself preferred to one earlier in time to himself who has given no such notice. Wilmot v. Pike (5 Hare 14); Re Richards ([1890] 45 Ch. D. 589); Jones v. Jones ([1838] 8 Sim. 633); Taylor v. London and County Bank ([1901] 2 Ch. 231), and a large number of other authorities are conclusive as to that. As regards personalty and choses in action, let us see what Lord Parker (then Mr. Justice) said in 1910 in Weniger's Policy (2 Ch. 291): It is clear that in the case of choses in action, such as a life insurance policy, the priorities of equitable incumbrancers are determined, in default of their having gained priority by giving notice, by the order of the dates of their charges. But the proposition, both in its application to real property and to personal property, has an important exception. And we will let Lord Justice Lindley express that exception: "The above maxim," says that very learned Judge in Baily v. Barnes (1 Ch. (C.A.) 25), “is in our law subject to an important qualification-that where equities are equal the legal estate prevails. Equality here does not mean or refer to priority in point of time, as is shown in cases on tacking. Equality means the non-existence of any circumstances which affects the conduct of one of the rival claimants and makes it less meritorious than that of the other. Equitable owners who are upon an equality in this respect may struggle for the legal estate and he who obtains it, having both law and equity on his side, is in a better situation than he who has equity only.'

DEAR SIR,-As one of the consequences of the present war, many homes in England will be broken up, and the surviving members of many families will find homes in the Colonies or the United States of America.

In these cases, it may be desirable to wind up trusts, where the trust funds are invested in English trust securities. With income tax at 6s. in the £, it will be a serious matter for a widow, a tenant for life under a will, if she goes to reside with a son or daughter in the Colonies or the United States, and by so doing cannot obtain repayment of the income tax, which has been deducted from the dividends of the trust investments under her husband's will.

In such a case, if the widow's surviving children have all attained twenty-one years of age, and their shares are absolutely vested in remainder, it may be desired to wind up the trust, to pay the widow a lump sum down (part of the trust fund) in discharge of her life interestbased, I presume, on a valuation made, say, by the actuary of a life insurance office, and to divide the balance of the trust funds amongst the children who are absolutely entitled in remainder.

But there is no precedent nor any notes of direction in any of the books of precedents to meet such a case. The books do not appear to contain precedents for the winding-up of trusts.

DEAR SIR, Since reading the letter of J. H. C. and your note thereon in the May number of The Conveyancer I have used the abbreviated form suggested by J. H. C. as sufficient to meet the requirements of section 73 of the Finance (1909-10) Act, 1910. No objection has been taken to it until last week when I have had four conveyances returned with an intimation to the effect that the certificate is not in the form required by the Act and that the Stamp Office has no authority whatever to accept any variation of the form of certificate and that the deeds cannot be passed for the lower rate of duty until the amendment is made. I shall be glad to hear whether other readers of your paper have met with a like objection. Yours faithfully,

July 19th, 1918.

4 6

Yours faithfully,

CLIO." [The suggestion appears to be a good one and will receive consideration.-ED.]

To the Editor of The Conveyancer.

DEAR SIR,-Referring to p. 529 of your current number, where North London, &c. v. Moy is cited as

FITZPATRICK (J.). Secretary's Manual of
Company Law. 16th ed.
GORE-BROWN (F.). Effect of War on Com-
mercial Transactions. 2nd ed.
HIBBERT (W. N.). International Private Law
MACMORRAN (A.). Local Government, 1916-17
PHILLIPSON (C.). Alsace Lorraine, Past,
Present, and Future

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3rd ed. All the above can be obtained from Sweet & Maxwell. Please send cash with order to save clerical labour.