The nemo dat rule prevailed as Adam could not give Carol an unencumbered fee

The nemo dat rule prevailed as adam could not give

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The nemo dat rule prevailed, as Adam could not give Carol an unencumbered fee simple, but rather a fee simple encumbered by Bill’s lease. Therefore, Bill’s earlier legal interest prevails. An earlier legal vs a later equitable interest “Where the equities are equal, the law prevails”: Bailey v Bailey [1894] 1 Ch 25 , per Lindley LJ. Generally, the earlier legal interest will prevail over the later equitable interest, unless there is postponing conduct from the holder of the earlier legal interest. Walker v Linom [1907] 2 Ch 104 : the later equitable interest prevailed over an earlier legal interest, because in this case the settlor dishonestly withheld the trust deed and conveyed the title to himself, thus creating a later equitable interest. The trustees, who held the earlier legal interest in the trust, was found to have been grossly negligent for not inquiring into the missing deed. Due to the trustees’ failure to inquire into the deed, the settlor prevailed. If the trustees had inquired about the deed and failed to receive a reasonable explanation, then the settlor would have committed postponing conduct. Northern Counties Fire Insurance v Whipp (1884) 26 Ch D 482 : Mr Crabtree mortgaged his properties to his employer Northern Counties Fire Insurance. The title deeds were kept in a safe at work. Mr Crabtree, as company manager, was in possession of the safe’s key and removed the mortgage to the company from the title deeds. He then used the deeds to obtain a loan from Mrs Whipp. The company went into liquidation. Mrs Whipp claimed that her later equitable interest should prevail over the earlier legal interest of the company. The Court rejected Mrs Whipp’s argument, because the company did not act with “great carelessness” and thus the equities were not unequal. The company prevailed in priority.
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An earlier equitable vs later legal interest According to Pilcher v Rawlins (1872) LR 7 Ch App 259 , an earlier equitable interest prevails unless the later legal interest was acquired by a bona fide purchaser for value who takes without notice of the equitable interest. For example, a 10-year lease in writing that has not been legally executed under a deed from A to B, and is sold from A to C sometime during the 10 years would generally give B’s equitable interest priority over C’s later legal interest. Bona fide purchaser for value Bona fide means that the purchaser must act in good faith. Typically, it refers to a purchaser not having notice of the prior equitable interest, and not committing fraud, undue influence or unconscionability. Purchaser for value means someone buying property for valuable consideration beyond a nominal value. $1 was deemed not to constitute valuable consideration: Cassegrain v Gerard Cassegrain (2015) 254 CLR 425.
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  • james
  • Fee simple, Deed

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