the 1st of August 1855, it was declared that the trustees should stand possessed of all the lands and premises thereby conveyed, upon trust 1860. Ch. Appeal. In re to sell, and out of the proceeds to pay all incumbrances for the time BURMEster. being affecting the said lands, and upon trust, as to the residue or Statement. surplus of such proceeds, for the said John Sadleir absolutely; and by another deed, of the 8th day of September 1855, the said John Sadleir declared a trust of the said residue so coming to him, and that the same should be applied in discharging the sums due by him to the London and County Bank, and to the said Tipperary Bank. John Sadleir died, by his own hand, in February 1856, insolvent ; and that no payment was made to Mr. Eyre on foot of the said indenture of the 20th day of October 1854, except a payment of £3000, made on or about the 4th day of December 1855, in pursuance of the terms of the said indenture; and it was believed that the entire sums lent to Lord Kingston and Mr. Smith would be lost. On the 30th of June 1856, the said trustees presented a petition to the Incumbered Estates Court, for a sale, among others, of the lands included in Mr. Eyre's mortgage; and Mr. William Cory and Mr. Andrew Durham having been substituted for Messrs. Law and the late James Sadleir as trustees for sale, the proceedings were carried on in the names of the new trustees, and the lands sold. On the ruling of the final schedule of incumbrances, on the 31st of October 1859, Mr. Eyre, in pursuance of an objection previously filed by him, submitted that, at the date of the declaration of trust, of the 7th of September 1855, his mortgage was in equity a subsisting charge on the said lands, and a trust was, by the last-mentioned deed, declared for the payment of the same, and that the said London and County Bank could claim nothing under the said last-mentioned deed, or the deed of the 8th of September 1855, except the surplus to which the said John Sadleir was entitled after payment of Mr. Eyre's mortgage, of the 20th of October 1854. The indenture of the 7th day of September 1855 was alone registered. Judge Longfield, however, was pleased to order and adjudge"That the said release of the 5th day of October 1855 was void as against any surplus coming to John Sadleir, but that the same was 1860. Ch. Appeal. In re Statement. valid as regards the claim of the London and County Bank." And it was accordingly declared by the Court, that the objection of Mr. BURMESTER. Eyre should be overruled with costs. Thereupon Mr. Eyre filed his petition of appeal, submitting thereby that Judge Longfield's order was erroneous, and ought to be reversed or varied, so far as it declared the said deed of release valid, as regarded the claim of the said London and County Bank, and so far as it overruled Mr. Eyre's objection; and that he ought to be declared entitled to a lien on the proceeds of the sales of the lands comprised in the said indenture of mortgage, of the 20th of October 1854, according to the rights conferred on him by that deed, as if the said indenture of reconveyance, of the 5th day of October 1855, had never been executed by him. Argument. The Attorney-General (with whom were Mr. Rogers and Mr. May), for the appellant. The question in this case is entirely one of equity, as neither of the parties concerned has the legal estate in the lands, which are now vested in the heir-at-law of John Sadleir. The Bank, in this case, does not fill the position of a purchaser who advances his money on the faith of receiving an unincumbered estate as security. At the time of the mortgage, their advances to Sadleir, and their connection with him, had been such that they were obliged to take anything he had to give them as security for the further advances which, to save themselves, they were compelled to make to him. They never attempted to ascertain, by search in Ireland, or by any investigation of title whatever, what they were getting as security. In truth, therefore, whatever may be the form of the recitals and covenants in their conveyances, in substance they took subject to Mr. Eyre's mortgage, and any other that might appear. They had full notice, moreover, that, if Mr. Eyre released, it would be only on getting valid securities in exchange. They must have known that his release was subject to an implied condition that it should be honestly obtained. But, in fact, they are mere volunteers, as regards this release; they never paid a shilling on the faith of it. The great bulk of their money they paid without having taken the ordinary precaution of inquiring into Sadleir's title, and, therefore, in ignorance of the mortgage; and then, notwithstanding notice, paid out the remainder of their money, on a promise of Sadleir that he would obtain a release, and without any communication with Mr. Eyre himself. It was not until long afterwards that Mr. Eyre re-conveyed; and, up to the moment of re-conveyance, he had never bound himself to do anything. As far as they were concerned, it was a purely voluntary act; and, so far were they from acting on it, that they did not see the deed until after Sadleir's death, and they do not appear to have been even aware that it was executed. They did nothing and gave nothing on the faith of this release. A person who has given no consideration cannot, even though innocent, take advantage of a deed obtained by fraud: Scholfield v. Templar (a). There is no authority for saying that if a party buys subject to a mortgage, he can, without giving any further consideration, avail himself of a release obtained by the fraud of his vendor. In such case, the vendor must be considered as the agent for the purchaser in the negociation of the release; and the latter would, therefore, be affected by the fraud. The neglect of this Bank, in making none of the usual searches, disentitles them to the consideration of a Court of Equity: Jackson v. Roe (b). "It would be against reason," says the Master of the Rolls, in Hubbard v. Lyster (c), where there was a defence of purchase for value without notice, "to allow the protection of this plea to a purchaser who had wilfully relinquished the security which the statute has afforded him." On the subject of notice, they cited Sug. Ven. & Pur., p. 619, and the cases there referred to. 1860. Ch. Appeal. In re BURMESTER. Argument. Mr. Serjeant Lawson and Mr. Sullivan (with whom were Mr. Brewster and Mr. Romney Foley), for the London and County Bank. It is quite a mistake here to suppose that the Bank contracted with Sadleir for a security on these lands subject to Mr. Eyre's (b) 2 Sim. & Stu. 472. (a) 1 Johns. 135. (c) 7 Ir. Eq. Rep. 560. 1860. Ch. Appeal. In re Argument. mortgage. If they did, their case would stand on different grounds from what it rests on. They contracted, as the deeds show, for a BURMESTER. security on an unincumbered estate (save as to a specified mortgage). Sadleir covenanted that the lands were unincumbered, and for further assurance. As soon as the Bank, in the fair and regular completion of this conveyance, discovered the existence of this mortgage, they called on Sadleir, in pursuance of his covenant, to procure a release; and it was only on his express understanding to do so forthwith that the remainder of the money was paid. How can it be said that the Bank have not given their money for whatever Sadleir procured for them in pursuance of that undertaking? They are plainly purchasers of it for value. It is not necessary that the consideration in such a case should be paid to the person releasing: Cobbett v. Brook (a). The Bank, as is alleged by the appellant himself, held themselves altogether aloof from the dealings between Sadleir and Mr. Eyre; and, in that respect, their case is quite distinguishable from that of Templar, in Scholfield v. Templar. There, the misrepresentation was made with the concurrence (no doubt innocently) of the person who was to obtain the advantage by it. Then, immediately after the payment of the money, they were assured, by Mr. Eyre's known solicitor, with whom they had been in communication, that a release would be executed by Mr. Eyre; and on that assurance, and relying on the release, they remained quiescent ever after. It is impossible to say what their position. might have been, with regard to these moneys, if Mr. Eyre had refused to release, and they had proceeded to call them in. They have, therefore, changed their position materially on the faith of his release. He knew well, through his solicitor, that the release was wanted to enable Sadleir to deal with other persons; and, if he intended that there should be any such condition attached to it, with regard to the validity of the new securities, as suggested at the Bar, he should have so expressly stated at the time. Is it to be supposed that everyone taking lands released under a proviso, such as was in Mr. Eyre's deed, is bound to see to the title of the substituted securities? As for negligence, it is Mr. Eyre's own negligence, in taking this (a) 20 Beav. 524. great amount of shares without asking a single question at the Railway office, which has caused all the difficulty. They referred to Staunton v. Verney (a); Joyce v. De Moleyns (b). The LORD CHANCELLOR. The question in this case turns not upon the point of registry search, or upon the fact of notice of the incumbrance itself. It comes simply to this; if these Bankers have given consideration for what they derive under this instrument, unless you show that they had notice of the fraud in question, or that they were concerned in the misrepresentation, what case do you make against them? That distinguishes their case from the case in Johnson's Reports. Here, the London and County Bank had no notice whatever of the fraud; they are not parties in any way to the misrepresentation; and the sole and single question then is, have they given consideration for what they got by virtue of this deed? What they got was a discharge of the incumbrance from the estate which they bought. They gave consideration for the contract to effect that discharge, and for the covenant for further assurance by John Sadleir, and all deriving under him, including Mr. Eyre. This agreement is carried out. The consideration comes down to the completion of the transaction; and it is impossible to say that the consideration does not run through the whole of it. Unless they can be fixed with fraud or misrepresentation prior to the execution of the deed, their position is unaffected. It would be inequitable in the highest degree to take from them the protection which they got, in innocence of the frauds, and upon the faith of which they paid their £95,000. The judgment of the Court below must be affirmed, and with costs. The LORD JUSTICE OF APPEAL. The grounds of my opinion, that the order of Judge Longfield should be affirmed, have been partly stated in the course of the argument. They are very few and simple. The London and (a) 2 Ed. 81, 85. (b) 9 Ir. Eq. Rep. 576; S. C., 3 J. & L. 698. 1860. Ch. Appeal. In re BURMESTER. Argument. Judgment. |