Ernest, and the deeds were deposited with the insurance company by way of equitable mortgage to secure the 13,0007., and remained with them till the 3d of August, 1857.

In 1857, arrangements were made by Ernest for borrow*117 ing* 13,000l. from the trustees of Mr. and Mrs. Hopgood's settlement. On the 3d of August, 1857, a mortgage to them in fee was executed, bearing that date; they paid off the insurance company, and the deeds were handed over to them, but not the memorandum of deposit. The plaintiff was one of the present trustees of the Hopgood settlement, to whom this mortgage had been transferred.

The mortgage to Frances Kemp was a mortgage of part of the same property for 3500l. It was dated the 1st of July, 1857, but was actually executed on the 3d of August, 1857, on the same day as the plaintiff's mortgage.

C. A. Govett acted as the solicitor to the Hopgood trustees in the matter of the mortgage, and when the deed had been engrossed, he sent it to Williams, as Ernest's solicitor, to get it executed. Williams also acted as solicitor to Miss Kemp as well as Ernest in the matter of the mortgage to her, and the money was advanced out of moneys she had left in his hands for investment. It appeared from the evidence that the two mortgage-deeds along with several other deeds were brought to Ernest by Williams's clerk in one parcel for execution; that Ernest, relying upon Williams, took them out of the parcel and signed them in the order in which they came to hand, signing the plaintiff's deed before Miss Kemp's, without having any purpose in signing one before the other, and when he had signed all, handed them back to the clerk together, saying, "That is my delivery."

Vice-Chancellor Wood held that the delivery of the deeds was

simultaneous, and that, as a deed takes effect from its deliv*118 ery, the two mortgage-deeds took effect * at once. His

Honor thought that the case was very analogous to that of a devise to A., and then a devise of the same estate to B. in a subsequent part of the will, which was settled to give the estate to A. and B. either jointly or as tenants in common, and that the effect of two cotemporaneous conveyances (as to which point, however, his Honor could find no direct authority) must be similar. His Honor accordingly decided that the two mortgages were payable pari passu. The plaintiff appealed.

Mr. Giffard and Mr. Fischer, for the appellant. We say that we are entitled to stand in the place of the insurance company, for our money paid off their charge. But, supposing the transaction a new mortgage transaction, we say, first, that Miss Kemp was bound by the knowledge of Williams. Brotherton v. Hatt. (a) She cannot adopt his acts without being bound by his fraud. Huguenin v. Baseley. (b) But if, by reason of his having committed a fraud, she is not affected by notice of all that he knew: Kennedy v. Green; (c) at all events he was her agent, and she must be bound by his negligence, and be in the position of a person who made no inquiry after the deeds, a negligence which is of itself sufficient to postpone her. Hewitt v. Loosemore. (d) We submit that on these grounds the decision must be in our favour, even if the Vice Chancellor be right as to the effect of the deeds at law. But we contend that our deed has priority at law, it not being necessary that there should be formal words of delivery. Co. Litt., (e)* Sheppard's Touchst., (g) Doe v. Knight, (h) *119 Bowker v. Burdikin, (i) Nash v. Flyn. (k)

Mr. G. Simpson and Mr. Cotton, for Miss Kemp. As to the claim to stand in the position of the Law and Equity Insurance Company, there is no ground for it; the transaction of August, 1857, was a new transaction, the insurance company was paid off, but there was no transfer of their mortgage, nor any attempt to keep it alive. The debts were different in amount, and the memorandum of deposit was not handed over, which is decisive against a transfer. The mere handing over of the deeds was no transfer, being merely in pursuance of the legal mortgage. Ex parte Hooper. (1) Notice, therefore, is out of the case: there was no prior equity of which to have notice. Though Williams was Miss Kemp's agent, there was such negligence on the part of the solicitor of the trustees, that his clients cannot assert any equity founded on the fraud of Williams. The solicitor of the trustees ought to have witnessed Ernest's execution of their mortgage-deed: Viney v. Chaplin; (m) and if he had done so all this state of

(a) 2 Vern. 573.

(b) 14 Ves. 273.

(c) 3 My. & K. 699.

(d) 9 Hare, 449, 458.

(e) Page 36 a.
(g) Pages 57, 58.

(h) 5 B. & C. 671.

(i) 11 M. & W. 147.
(k) 1 Jo. & Lat. 162, 175.
(7) 19 Ves. 477.

(m) 2 De G. & J. 468.

confusion would have been avoided. But in fact the fraud of Williams was rather a fraud on Miss Kemp than on any one else. There was no fraud on Ernest; he had the money and intended to give security for it; there was therefore no fraud in obtaining the deeds from him, which distinguishes the case from Huguenin v. Baseley. It was the duty of Williams to obtain a first mortgage for Miss Kemp; he committed a fraud on both parties, and unless the plaintiffs can make out a prior legal title they cannot *120 establish priority. But they cannot make out a prior

legal title. The deeds were incomplete until delivery, and the delivery was cotemporaneous. This creates tenancy in comBurton's Real Property, (a) Simonds's Case, (b) Jenk., (c) Coward v. Marshall, (d) Sherratt v. Bentley. (e)

mon.

Mr. Fischer, in reply.

Judgment reserved.

July 15.

THE LORD JUSTICE TURNER. This is a very singular case, and involves a variety of points, but on many of these points it is not in my judgment necessary for us to give, and I do not intend to give, any opinion. The Vice-Chancellor has decided this case upon the ground that the plaintiff and his co-trustee, and the defendant Frances Kemp, between whom the question in this case lies, are joint tenants or tenants in common at law, and as this view of the case is most favourable to the defendant F. Kemp, the respondent upon this appeal, I assume, without meaning to decide, that his Honor's opinion upon this point is correct; but with all deference to his Honor, it does not seem to me that this case is exhausted by the decision upon this point. It seems to me that the real question between these parties lies behind this point; that it is in truth this, whether, assuming the joint tenancy or tenancy in

common at law, there is not an equity which entitles the * 121 * plaintiff and his co-trustee to priority over the defendant Frances Kemp, and I am of opinion that there is such an

(a) Sect. 598.

(b) 3 Leon. 11; 3 Bulstr. 105; Yelv. 210; Lane, 118; Cro. Jac. 49.

(c) Page 256, cent. 6, case 50.

(d) Cro. Eliz. 721.

(e) 2 My. & K. 149, 161.

equity. The deeds belonging to the estate of which the plaintiff and his co-trustee claim to be prior mortgagees came to the hands of the plaintiff and his co-trustee. Whether they are entitled, by virtue of the deeds having come to their hands, to stand in the place of the law and equity office, from whom they received the deeds, I give no opinion; but of this I entertain no doubt, that they received these deeds, not as joint tenants or tenants in common with the defendant F. Kemp of the estate comprised in the deeds, but as sole mortgagees of the estate and without notice of any right or title on the part of the defendant F. Kemp to any interest in the estate; and I think that the defendant F. Kemp's having taken such interest as she got in the estate without having set up any claim to the deeds, and without having made any inquiry respecting them, amounted to such gross negligence on her part as to entitle the plaintiff and his co-trustee to priority over her, even although she may have obtained a legal interest in the estate. That there was fraud upon her on the part of Williams may, for the purpose of the argument, be admitted; that by reason of that fraud she ought not to be affected with notice of the claim of the plaintiff and his co-trustee may, for the purposes of the argument, be admitted also; but Williams was her agent, and whether affected by his fraud or not, she must be affected by his negligence. Upon these grounds, I respectfully differ from the opinion of the ViceChancellor, and am of opinion that this certificate must be altered by giving priority to the plaintiff and his co-trustee over the defendant F. Kemp.

The Lord Justice KNIGHT BRUCE concurred.

[93]

*122 * KISCH v. THE CENTRAL RAILWAY COMPANY OF VENEZUELA (LIMITED).1

1865. May 30, 31. June 1, 3, 5, 6. July 21. Before the LORDS JUSTICES.

The plaintiff took shares in a company formed for making a railway in Venezuela. He took them on the faith of a prospectus which referred to a concession for making the railway as having been made by the Venezuelan government to the company, and stated that the contractor had guaranteed a dividend of 241. per cent on the paid-up capital during the construction of the works, and that the Venezuelan government had guaranteed a dividend of 91. per cent on the paid-up capital for twenty years. The concession had, in fact, been made to another company, and bought by this company at a price equal to one-tenth of its whole capital. The articles of association showed that the concession was purchased from another company, and referred to the agreement for purchase; and the memorandum of association stated one of the objects of the company to be, acquiring, by purchase or otherwise, concessions from the Venezuelan government. The guarantee of the contractor for interest during the construction was, in fact, limited to 20,000l. in all (the whole capital being 500,000l.). The guarantee of the Venezuelan government was for a dividend of 91. per cent while the line, without any default on the part of the company, failed to produce it. The documents giving the above guarantees were referred to in the articles without stating their contents.

Held, that the plaintiff having, when he applied for the shares, agreed to be bound by the memorandum and articles of association, could not allege ignorance of their contents, and, therefore, although the prospectus ought to have stated the fact of the concession having been acquired by purchase at a heavy price, semble, the plaintiff could not have established any title to relief on this ground.

But held, that although the plaintiff must be treated as having notice of the coutents of the memorandum and articles, he was not thereby affected by such knowledge of the contents of all the documents referred to but not set forth in them, as to be debarred from complaining of any deceptive statement made to him respecting them; that he was entitled to rely on the representations in the prospectus as to the guarantees by the contractor and by Venezuelan government, and that these representations were so far from being

1 S. C. affirmed, L. R. 2 H. L. 99.

2 See Lawrence's Case, L. R. 2 Ch. Ap. 412, 418, per CAIRNS, L. J.

3 See Rawlins v. Wickham, 3 De G. & J. 304, and cases in note (1); Central Railway Co. of Venezuela v. Kisch, L. R. 2 H. L. 99; Kerr F. & M. (1st Am. ed.) 79, 80, 255, 256; Reese River Mining Co. v. Smith, L. R. 4 H. L. 64.