ON TRUST OR consequence of this negligence the parties had been involved in transactions which could not have taken place, if the first purchaser, by omitting to communicate his claim to the legal holders of the fund, had not put it out of the power of these legal holders, though acting with perfect fairness and honesty, to represent to the subsequent purchaser the true state of the circumstances; that where a purchaser by his negligence placed a subsequent purchaser, who had acted with all due caution, in such a situation that a loss must fall either upon the one or the other, he who had been in default, and had caused the mischief, ought not to be saved harmless at the expense of an innocent party; that under such circumstances the general rule of priority ought to be qualified, and that he who stood first in point of time ought to be postponed to a competitor claiming under an instrument of later date, who had been informed by the legal holder of the fund that there was no incumbrance affecting it, and who gave that legal holder notice of his purchase before notice had been given of any other incumbrance." As "the point did not appear to have been expressly determined in any preceding case, and was of great importance," he required it to be re-argued before coming to a final opinion. His Honor, in giving judgment, after observing that the transaction with Dearle “was nothing more than an equitable contract for a collateral security, to be issuing out of a chose in action, not followed by equitable possession, nor by any thing tantamount thereto," proceeds thus : "It was not possible for the legatee to transfer the legal interest; that could not but remain with the executors; but whereever it is intended to complete the transfer of a chose in action, there is a mode of dealing with it which the court considers tantamount to possession, namely, notice given to the legal deposi tory of the fund. Where a contract respecting property in the hands of other persons, who have a legal right to the possession, is made behind the back of those in whom the legal interest is thus vested, it is necessary, if the security is intended to attach on the thing itself, to lay hold of that thing in the manner in which its nature permits it to be laid hold of,—that is, by giving notice of the contract to those in whom the legal interest is. By such notice, the legal holders are converted into trustees for the new purchaser, and are charged with responsibility towards him: and the cestui que trust is deprived of the power of carrying the same security repeatedly into the market, and of inducing third persons to advance money upon it, under the erroneous belief that it belongs to him absolutely, free from incumbrance, and that the trustees are still trustees for him, and for no one else. . It is true that a chose in action does 1 Atk. 182. not admit of tangible actual possession. But in Ryall v. Rowles', 1 Vez. 371; the judges held that, in the case of a chose in action, you must do every thing towards having possession which the subject admits of; you must do that which is tantamount to obtaining possession, by placing every person who has an equitable or legal interest in the matter, under an obligation to treat it as your property. For this purpose you must give notice to the legal holder of the fund. In the case of a debt, for instance, notice to the debtor is, for many purposes, tantamount to possession. If you omit to give that notice, you are guilty of the same degree and species of neglect as he who leaves a personal chattel, to which he has acquired a title, in the actual possession and under the absolute control of another person." Again, adverting to the doctrine of Ryall v. Rowles, "in that case it was the opinion of all the judges, that he who contracts for a chose in action, and does not follow up his title by notice, gives personal credit to the person with whom he deals. Notice, then, is necessary to perfect the title, to give a complete right in rem, and not merely a right as against him who conveys his interest. If you are willing to trust the personal credit of the man, and are satisfied that he will make no improper use of the possession in which you allow him to remain, notice is not necessary, for against him the title is perfect. But if he, availing himself of the possession as a means of obtaining credit, induces third persons to purchase from him as the actual owner, and they part with their money before your partial conveyance is notified to them, you must be postponed. What was done by Dearle did not exhaust the thing (to borrow the principle of the civil law), but left it still open to traffic. These are the principles on which I think it to be very old law, that possession, or what is tantamount to possession, is the criterion of perfect title to personal chattels, and that he who does not obtain such possession must take his chance." On appeal this judgment was affirmed by Lord Lyndhurst, on principles similar to those laid down by the Master of the Rolls. After showing that, in the assignment of per 13 Russ. 58. 2 Williams v. Thorp, 2 Sim. 257; ex parte Colville, Id. 570. Gardner v. Lachlan, 8 Sim. 123. s. 7. sonal property, whether in possession or in action, "delivery is necessary to complete the transaction," he proceeds thus: "In cases like the present the act of giving the trustee notice is, in a certain degree, taking possession of the fund; it is going as far towards equitable possession as it is possible to go; for, after notice given, the trustee of the fund becomes a trustee for the assignee who has given him notice1." These principles obviously apply to an assignment of a policy of assurance upon a life. Such a case, indeed, is exactly analogous to that of a bond, both the bond and the policy being evidence of a debt-the former by the obligor, the latter by the Insurance Company; and as, in the former case, the assignment of the debt and delivery of the bond to the assignee, would not be an effectual transfer, as against third persons; so neither would the assignment of the policy and delivery of it to the assignee in the latter. And, therefore, where a person who has effected a life assurance assigns the policy and delivers it to the assignee, but does not give notice of the assignment to the company, it will be void against an assignment in bankruptcy, or subsequent assignee, who may give notice2. In a recent case, upon this subject, the question was, whether the notice given was sufficient to perfect the assignment? There a broker, on behalf of the owner of a ship, having entered into a charter-party with A., by which A. agreed to pay to the broker, on behalf of the owner, a certain sum for the freight of the ship, the owner afterwards assigned the freight and earnings which might become due under the charterparty, as security for a debt. The assignee gave notice of the assignment to the broker, and, the vessel having completed her voyage, and the owner having become bankrupt, it was held, that the assignment was complete, the notice to the broker being sufficient to intercept the right of the owner to demand the money, and, after the notice given by the assignee, the broker would have paid over the money to any one else at his own peril3. Declaration of Trusts.]-By the Statute of Frauds it was en29 Car. 2, c. 3, acted, "that all declarations or creation of trusts or confidence, of any lands, tenements, or hereditaments, shall be manifested and "proved by some writing, signed by the party who is by law entitled "to declare such trust, or by his last will in writing; or else they "shall be utterly void and of none effect." The first observation that occurs upon this enactment is, that it extends only to real 10 Mod. 404. 506. estate 1. Thus, in Benbow v. Townshend2, A. took a mortgage in Nab v. Nab, the name of B., his brother, but did not, at the time of the transaction, or at any time afterwards, communicate it to him. At the time of the loan, A. gave directions that the security should be made in the name of B., as he intended the mortgage to be for his benefit, and afterwards, on receiving the first half year's interest, said he should receive the interest, but the principal money was to be his brother's. He died, making a will and codicil, in which he took no notice of the mortgage. It was held, "that the trust being of personal estate was not within the Statute of Frauds, or the doctrine of resulting trusts under that statute, but that the property would belong to the brother after the testator, by force of his parol declaration." The trust must be declared in writing. Thus, in a late case3, a son conveyed an estate to his father, nominally as purchaser, but really as a trustee; and in order that the father, who was in better credit than the son, might raise money upon it by way of mortgage, for the use of the son. The father died shortly afterraised, having by will, subse wards, and before any money was The statute prescribes no time within which the declaration must be made; and therefore, even after a bankruptcy, it will do5. Neither does it prescribe any particular form of words, or require any particular solemnity, to give validity to the declaration. A writing in any form, and signed by the party entitled to declare the trust, is sufficient; as, for instance, a note or memorandum from a trustee, promising to execute a declaration of trust, or confessing that he purchased the lands with another man's money7,or a bond from a trustee, either to perform the trusts of a conveyance, in which no trusts are mentioned, or to make an assign 3 Leman v. Russ. 421. Whitley, 4 4 Cripps v. Jee, 4 Bro. C. C. 472. 5 Gardner v. 6 Rowe, 2 Sim. & Stu. 346. Bellamy v. Burrow, Ca. Tem. Talb. 97. 7 Ambrose v. Ambrose, 1 P. W. 322. Goodwin v. Cutler, Finch, 356. 1 Moorcroft v. Dowding, 2 P. W. 314. ment as his cestui que trust should direct1,-or a recital in a purchase-deed, that the purchase-money belonged to a third person2, Kirk v. Kirk, or an answer in Chancery confessing a trust3, or a letter from a Pr. Ch. 84; Deg v. Deg, 2 3 Hampton v. 4 Cooke v. Brooking, 2 Vern. 106. • Legard v. Hodges, 3 Bro. C. C. 531. 6 Wheatley v. Purr, 1 Kee. 551. 29 Car. 2, c. 3, s. 8. trustee, disclosing the purposes of a devise to him, or a writing in the shape of mutual covenants or articles of agreement5. So, when a sum of money was, by the direction of A., carried by her bankers to an account in the joint names of herself as trustee for certain persons named, and those persons and the bankers gave a promissory note for the amount, payable at fourteen days, with interest, to A., trustee for the persons therein named, it was held, that the transaction amounted to a complete declaration of trust, and that the executor was a trustee for the persons named 6. With respect to resulting or implied trusts, it is enacted by the same statute 7, "that where any conveyance shall be made of any "lands or tenements, by which a trust or confidence shall or may "arise or result, by implication or construction of law, or be "transferred or extinguished by an act or operation of law, then "and in every such case such trust or confidence shall be of the "like force and effect as the same would have been if this statute "had not been made." The ordinary contract for the purchase of real estate will illustrate the meaning of this section of the Statute of Frauds. Immediately on the contract being signed by the parties, the vendor is, by construction of a court of equity, held to be a trustee of the land for the purchaser, and the purchaser a trustee of the purchase-money for the vendor, although on the face of the instrument of contract no trust is created and none declared. But for the reservation contained in this section the court of Chancery could not have exercised its present jurisdiction, at least not in its present form, over contracts for the sale of land. Having thus given some account of trusts, as affected by the mode of their creation,-of their general legal incidents,-and of the declaration of them, as prescribed by the Statute of Frauds,I shall now proceed to consider, in detail, some of the more important of the special trusts. Trusts to preserve contingent remainders.]—The nature of this trust cannot be satisfactorily elucidated without reference to the properties of contingent remainders; and the reader is therefore referred to this head for an explanation of it. Trusts for sale.]-Trusts of this description are presented in |