an outstanding satisfied term got in with notice of the prior equity.[1] No case has been found where such a term was got in without notice of the prior equity. Sir George Jessel, M. R., put the case, however, in Mumford v. Stohwasser,[2] and expressed a strong opinion that the later equitable claimant could not use the term as tabula in naufragio, because, having acquired it as a volunteer, he could not honestly retain it.
The common illustration of the ancient rule is the English doctrine of tacking, whereby a third mortgagee, who advanced his money in ignorance of a second mortgage, is permitted upon discovering its existence to buy up the first mortgage, to tack his own to it, and so “squeeze out” the second.[3] This doctrine has found no support in this country,[4] and has been the subject of much adverse criticism in England.[5] Even if a third mortgagee should buy up the first mortgage, being still in ignorance of the second, he would not, upon principle, be entitled to priority over the second mortgagee. For, as he gave his money solely for the first mortgage, if he should be allowed to get anything more than that, he would get it for nothing, and could not, therefore, honestly keep it at the expense of the second mortgagee.[6]
It is possible, however, for a later equitable claimant, who has already paid his money, to obtain the legal title afterwards for
- ↑ Allen v. Knight, 5 Hare, 272, 11 Jur. 257; Carter v. Carter, 3 K. & J. 717; Prosser v. Rice, 28 Beav. 68, 74; Sharples v. Adams, 32 Beav. 213, 216; Baillie v. McKewan, 35 Beav. 177; Pilcher v. Rawlins, 7 Ch. 259, 268; Mumford v. Stohwasser, 18 Eq. 556; Cas. on Trusts, 534, n. 2.
- ↑ 18 Eq. 562. The same idea is expressed by the same Judge in Maxfield v. Burton, 17 Eq. 15, 19, and by North, J., in Garnham v. Skipper, 55 L. J. Ch. 263, 264.
- ↑ Marsh v. Lee, 1 Ch. Ca. 162; Bates v. Johnson, Johns. 304; Cas. on Trusts, 537, 541, n. 1.
- ↑ 1 Story, Eq. Jur. (12 ed.), §§ 413–419; 4 Kent (13 ed.), 177–179; Cas. on Trusts, 542.
- ↑ Bruce v. Duchess of Marlborough, 2 P. Wms. 491; Jennings v. Jordan, 6 App. Cas. 698, 714; West London Bank v. Reliance Society, 29 Ch. Div. 954, 961, 963. Under certain circumstances one who advances money upon the security of property, upon which two mortgages have already been given, is justly entitled to outrank the second mortgagee. For example, M has made a first mortgage for $5,000 to A, and a second mortgage for $5,000 to B. A desiring his money, M proposes to C that he shall advance $10,000, paying $5,000 to A, and taking a conveyance from him, and paying the other $5,000 to M. If C makes the advance of $10,000 in the manner suggested, and has no notice of B’s mortgage, he may fairly claim priority over B. Peacock v. Burt, 4 L. J. Ch., n. s., 33, was such a case. This is not a case of tacking, nor of tabula in naufragio. The transaction is the same in substance as if A had reconveyed to M, and M had then made a legal mortgage for $10,000 to C. Carlisle Co. v. Thompson, 28 Ch. D. 398, was similar to Peacock v. Burt, except that C was not a mortgagee, but a purchaser.
- ↑ [See 4 Harv. Law Rev. 309, n. 3.]
