Cooper (5), Lord Thurlow twice decided, that where the legal estate was outstanding in a first mortgagee, of two subsequent equitable incumbrancers, he who is prior in time must be prior in equity. His words are-the second equitable incumbrancer "had the security he trusted to; he knew he had not the legal estate; he trusted to the honour of the borrower." In the present case, no such question arises as is noticed in Willoughby v. Willoughby (6), or as in Evans v. Bicknell (7), where Lord Eldon alludes to what fell from Buller, J. in Goodtitle v. Morgan (8); for Harries, the third incumbrancer, has not got in the legal estate, nor has he any declaration of trust from the holder of it, nor has possession of the mortgage deeds conveying the legal estate, or of any other of the title deeds. He gave notice of his incumbrance to the first mortgagee; but, according to what the present Lord Chancellor decided in Peacock v. Burt, such a notice is of no value. The fact is, that upon Harries's answer, and before the Master, as well as in the argument at the bar, the case of Harries was attempted to be put upon the decisions in Dearle v. Hall, Loveridge v. Cooper, and Foster v. Blackstone, decided by Sir J. Leach, and afterwards affirmed by the Lords. But in each of those cases, the subject of discussion was a chose in action. According to what is said by Lord Lyndhurst, in Forster v. Cockerell (9), on moving to affirm the decree in Foster v. Blackstone, and to what is said by the present Lord Chancellor in Peacock v. Burt, in Mr. Cootes's valuable treatise on Mortgages, p. 607, one principle established by Dearle v. Hall, and Loveridge v. Cooper, was, that in order to complete the transfer of a chose in action, notice to the legal holder of the fund is necessary. In 3 Russ. 22, Sir T. Plumer says, "The law of England has always been, that personal property passes by delivery of possession, and it is possession which determines the apparent ownership;" and by way of preserving the analogy between personal chattels in possession, and choses in action, he says, in p. 24, "Notice then is neces sary to perfect the title to a chose in action, to give a complete right in rem, and not merely a right as against him who conveys his interest." But what is stated by the Lord Chancellor, in Hiern v. Mill (10), is unquestionably true: "There is a marked distinction between a real estate and a personal chattel. The latter is held by possession, the real estate by title." In Loveridge v. Cooper, Sir T. Plumer says, "It is of the utmost importance to the interests of mankind, that plain and clear rules of property should be laid down, and that, when laid down, they should not be frittered away by nice and frivolous distinctions. Broad distinctions must be preserved; and it is of the utmost importance that an equity of redemption of real estate should not be taken to be a mere equitable interest in the nature of a chose in action." Jones, the first incumbrancer on the equity of redemption, took his title by the conveyances of January 1826, and notice or possession was not necessary to complete his title. Harries took his title by a subsequent conveyance, and merely gave a notice, which did not and could not affect Jones. No fraud whatever can be imputed to Jones. He made some inquiry and was misled; he was the innocent subject of fraud, and not the doer of it; and, in my opinion, the exception must be allowed. } KING V. BRYANT. V.C. The defendant in a foreclosure suit being in contempt for want of answer, the plaintiff took the bill pro confesso, and proceeded to have the accounts taken in the Master's office ex parte, and without serving warrants on the defendant: and he afterwards had the Master's report confirmed absolute, in the first instance :-Held, that the defendant was entitled, although in contempt, to be heard to shew the irregularity of these proceedings; and that the proceedings were irregular. This was a bill filed by a mortgagee against a mortgagor for a foreclosure. The defendant having appeared, but neglecting (10) 13 Ves. 119. to answer, was committed for contempt. The plaintiff afterwards proceeded to take the bill pro confesso, and on the 8th of May 1837, obtained the usual decree referring it to the Master to take the usual accounts of the mortgage money, interest, and costs, and to fix a day for payment; and in default of payment, that the defendant should be foreclosed. The plaintiff proceeded to take the accounts in the Master's office ex parte, and without serving warrants on the defendant. The Master made his report, dated July 1837, whereby he certified the amount due to the plaintiff, and appointed the 22nd of January 1838 for payment. This report was confirmed by an order absolute in the first instance. The plaintiff did not serve this order on the defendant, and it appeared that the first information that he had of these proceedings, was in August 1837. An application was now made by the defendant, by petition, stating specific errors in the account, and praying that the order, confirming the report, might be discharged, and that the Master might review his report. Mr. Elderton appeared in support of the application; and Mr. Purvis on behalf of the plaintiff. The VICE CHANCELLOR decided, that while the defendant continued in contempt, he was not entitled to be heard. The defendant appealed from this decision to the Lord Chancellor. Mr. Purvis again raised the same objectoin, that the defendant, being in contempt, was not entitled to be heard, and cited Beames's Orders, 35. Vowles v. Young, 9 Ves. 172. Lord Wenman v. Osbaldiston, 2 Bro. Mr. Elderton, for the defendant, contended, that notwithstanding the defendant's being in contempt, he was entitled to be heard to rectify irregularities in the Master's office. Dominicetti v. Latti, 2 Dick. 588. The LORD CHANCELLOR decided that the defendant was entitled to be heard, but directed the case to stand over to make inquiry as to the regularity of the practice of taking the accounts ex parte, and confirming the report without a previous order nisi;-he said his present impression was, that such practice was irregular. Jan. 31.-Mr. Purvis contended, that, by having avoided putting in an answer, the defendant had evaded setting forth any accounts, or charging himself in any way; and that, if the defendant were now allowed to be heard, notwithstanding his being in contempt, he would be in a better position than if he had not committed the irregularity which was complained of. The LORD CHANCELLOR.-In this case, the plaintiff having placed the defendant in contempt for want of an answer, proceeds to take the bill pro confesso; he then goes into the Master's office, and takes the account ex parte; and the result is, that the Master finds a certain sum to be due, upon which the plaintiff proceeds to foreclose the estate. What I wished to have discussed was, whether the plaintiff was regular in that proceeding, or whether he ought not to have served warrants on the defendant, and also to have served him with the order nisi, before confirmation. It would be a most unjust proceeding to foreclose the defendant without giving him any opportunity of being present, and protecting his rights, and if such were the course, it is so manifestly unjust that I would not follow it; but there is no such practice. It now appears, that, under the circumstances which have occurred here, an order confirming the Master's report absolute in the first instance, is irregular, and that the plaintiff must first get an order nisi; then why would this be necessary if the defendant was not entitled to service of the order nisi? The necessity for the order nisi assumes the necessity of the accounting party being present at the taking of the accounts. Where the defendants will not answer, the Court gives to the plaintiff the benefit of a decree pro confesso, but the duty of the officer of the Court is to execute that decree in the ordinary way, and no authority is to be found for taking the accounts ex parte. Such was the opinion of the Court in 1780, as appears from the case of Dominicetti v. Latti. The plaintiff here has proceeded ex parte, when he ought to have proceeded by warrants; and the present application is to protect the defendant against an order for a foreclosure obtained upon an irregular report, which can only be considered as a nullity. The cause must therefore be referred back to the Master generally. Note.-Registrar's note of Dominicetti v. Latti. On the 10th of March 1780, exceptions came on, and on the 21st of July 1780, the Lord Chancellor "referred it to the Masters of the Court for them to certify what is and hath been the practice in similar cases, and exceptions to stand over in the meantime." The Masters made their certificate, which could not be found; it must therefore be assumed to have been against the exceptions, as on the 7th of August 1780, the Lord Chancellor overruled the exceptions. Mortgage-Infant-Sale. Where the heir of a mortgagor is an infant, the mortgagee is not entitled to a sale of the estate, unless it appears, upon reference to the Master, to be for the benefit of the infant; otherwise the mortgagee is entitled to a foreclosure only. Where, from the facts, the Court is able to see that it will be for the benefit of the infant that a sale should take place, it will order a sale without a previous reference to the Master. Mr. Pemberton, in this case, on behalf of a mortgagee, asked for an immediate decree for a sale of the estate, as against the defendant, the infant heir of the mortgagor. Mr. Romilly, for J. W. Courtney, the infant, contended, that the mortgagee was not entitled to a sale of the mortgaged estate, no power of sale being contained in the mortgage deed; he insisted, that a mortgagee was entitled to a decree for a foreclosure only, and that the circumstance of there being an infant heir, made no difference, a sale being directed only for the benefit of an infant-Monday v. Monday (1). (1) 1 Ves. & Bea. 223; and see Coote, 600. Mr. Pemberton, in reply, insisted that the mortgagee was in all cases entitled, as against the infant heir of a mortgagor, to have the estate sold, that is, the security realized, and applied in payment of the mortgage debt; but The MASTER OF THE ROLLS said, he did not consider such to be the rule; for the estate might be more than sufficient to pay the debt, and it might be for the interest of the infant that the mortgage debt should be paid off. That he believed the course to be, to refer it to the Master, to inquire whether it would be for the infant's benefit that a sale should take place; and if the Master so found, the plaintiff might have a sale, otherwise he was entitled to a decree for a foreclosure only. As the matter had, however, been pressed, he would inquire as to the practice in such cases. Mar. 1.—The MASTER of the Rolls.— I have made inquiry, and find there is no doubt of the practice. In such cases, the Court refers it to the Master, to inquire whether it will be for the benefit of the infant, that a sale shall take place of the mortgaged estate. There have been cases before me where I have been satisfied that it would be for the benefit of the infant, and have directed a sale without a reference to the Master. If there were facts before me, which made it clearly for the benefit of the infant, I would not make the reference so as to give the benefit of the delay to either party. Lunatic Trustee-1 Will. 4. c. 60. Several trustees appointed on petition, under the act 1 Will. 4. c. 60, in the stead of a sole surviving lunatic trustee. New trustees appointed, under the act, of a sum of money charged by will upon real estates in the West Indies, and another sum secured by a bond. By a marriage settlement, dated the 8th of May 1802, the sum of 4,000l. charged upon estates in Antigua, and a sum of 4,000l. currency, or 2,500l. sterling, secured by a bond, were assigned to Sir George Bolton, Knt., Anthony Minton, and John Welch, upon certain trusts. John Welch was a lunatic, or person of unsound mind, and the property was vested in him alone, as the surviving trustee, upon the trusts of that indenture, such trusts being for the petitioners. The Master, to whom the matter had been referred, found these facts, and that John Welch was a trustee within the intent and meaning of the before-mentioned act of parliament, and had not any beneficial interest therein; and he approved of four persons whose names were mentioned in the report, as proper persons to be appointed trustees in the place of John Welch, of the sum so vested in him; and he also approved of another person, to assign the same in the place of John Welch, to the new trustees so approved. A petition was now presented for the confirmation of the Master's report, and that the persons approved by the Master as new trustees of the deed of 1802, might be appointed such new trustees accordingly. Mr. Sharpe appeared in support of the petition. The LORD CHANCELLOR at first expressed some doubt, whether the case was within the provisions of the act of parliament; but on a subsequent day he stated, that although that part of the act which related to such cases was obscure, yet, upon consideration, he was of opinion, that the case was within the act; and that he would, therefore, make the order. Desborough v. Rawlings (1), and Story v. Lord George Lennox (2). The case required to be produced was, they said, in reality the plaintiff's, and not the defendants'; it proved the plaintiff's case against that set up by the defendants. Mr. Tinney and Mr. J. Parker, contrà, were not called on to support the order of the Master of the Rolls. The LORD CHANCELLOR.-I never had any doubt in my mind as to what the rule of privilege was, but the difficulty is in its application. To say, that parties are to wait, and not consult counsel till actual litigation has commenced, originates a distinction without any reason. Parties must be at liberty at all times to communicate with their professional advisers, as to matters which may come in question, whether a bill has been filed or not, and they must be unrestrained in such communications. What possible difference in principle can there be, whether statements are made to counsel by writing or by parol? It is not pretended, that statements made by a client to his solicitor could be ordered to be disclosed: then, why should any other professional advice? Where the communication is confidential, there can be no possible distinction, whether litigation has or not actually commenced at the time that the communication is made, or the advice given. On this point, I entertain no doubt. The only question is, as to the manner in which the privilege is stated and insisted on in the answer, for much depends on that. The statement in this case is, that the defendants have in their possession "cases submitted to counsel, and the opinions thereon, which were submitted after the dispute had arisen, and bore reference thereto." All that was laid down in Story v. Lord George Lennox was, that the party must properly state his ground of objection in his answer. Here, the ground of exemption having been sufficiently stated by the answer, the appeal must be dismissed, but without costs, in consequence of the recommendation of the Master of the Rolls. (1) Post. (2) 1 Myl. & Cr. 534; s. c. 6 Law J. Rep. (N.S.) Chanc. 99. This case came before the Court on exceptions to the report of the Master, to whom the defendant's answer had been referred for insufficiency. The bill had been filed by the Atlas Insurance Company against two of the directors of the Eagle Insurance Company, Mr. Smith their actuary, and Messrs. Beetham, their solicitors, praying that a policy of insurance on the life of John Cochrane might be declared fraudulent and void, and for an injunction to restrain the Eagle Company from proceeding in an action at law thereon. The defendants, the Eagle Company, had, on the 24th of September 1834, effected an insurance with the plaintiffs for a sum of 4,000l. for four years, on the life of Cochrane, who died shortly afterwards. The Atlas Company having resisted payment of the 4,000l., an action at law was commenced by the Eagle Company for the recovery of that sum. The plaintiffs then filed this bill for the object above mentioned, and the effect of the statements in the bill was, that Cochrane was not, to the knowledge of the defendants, an insurable life; and that the defendants had suppressed and concealed many material circumstances, as to Cochrane's state of health and manner of living; and amongst others, that insurances on the life of Cochrane, proposed by the Eagle Company, had been rejected by other companies at the time the insurance with the Atlas was effected. The bill stated, that on the 18th of September 1834, a proposal had been NEW SERIES, VII.-CHANC. made, on behalf of the Eagle, to the Economic Company for an insurance by them on the life of Mr. Cochrane for 4,000l. ; and Mr. Travers, the medical officer of that company, having examined him, by letter, dated the 20th of September 1834, made so unfavourable a report on his state of health and habits, as to cause the Economic to reject the proposal for an insurance on his life, and that this had been done previous to the insurance being effected with the Atlas. The bill contained the following statement:-"That on Monday, the 22nd of September 1834, Mr. Downes, the actuary of the Economic Company, called at the office of the Eagle Company, and took with him the aforesaid letter of Mr. Travers, and Mr. Downes then had an interview with Henry Porter Smith, and told him that the Economic Company had had an unfavourable report of said John Cochrane, and that the proposed assurance on his life would be refused by the Economic Company, and that Mr. Downes thought it right to apprize the Eagle Company thereof immediately, and in candour to shew them Mr. Travers's said letter, which was the reason of the refusal; and Mr. Downes then handed over to Henry Porter Smith the letter of Mr. Travers, of the 20th of September 1834, and Henry Porter Smith took and perused the letter, and after having read it, he returned it to Mr. Downes, who thereupon went back to the office of the Economic Company, and wrote and sent to the Eagle Company a formal letter of rejection of the proposed assurance on the life of the said John Cochrane." The defendants were required to answer these statements of the bill, which statements were turned into interrogatories in the usual form, and which will be found hereafter stated in the answer of Messrs. Beetham. Messrs. Beetham, by their answer, denied all fraud; and in reference to the above allegation and the interrogatories thereon, stated as follows: "And Francis Beetham saith, and Albert William Beetham believes it to be true, having no knowledge of the same, save as being informed by the said Francis Beetham, that some one or two days before 2 A |