land in Great Britain or Ireland to borrow of private individuals, or himself to advance, money for the improvement of such land by works of drainage, and to have the money, spent in such improvement and in defraying the expenses incident thereto, charged on the inheritance by way of a rent charge for twenty-two years, which is to be payable half-yearly, and to be personal estate (t). The application must be made by such owner of the land to the inclosure commissioners, for an allowance of the loan, and such commissioners, after obtaining a report from an assistant commissioner, surveyor, or engineer, on the propriety of the application, may issue a certificate of allowance under their seal, stating the amount, if any, of the sum authorized to be borrowed or advanced, and are by the same or a subsequent certificate to fix the rate of interest to be payable in respect thereof (u). And the money, if borrowed from a third person, is to be paid into the Bank of England (for lands in England), or into some branch bank thereof to be specified by the commissioner, to the credit of the commissioner, who, however, are to have no personal liability in respect thereof. But in case of two or more offers of a loan, the applicant for the loan may give the preference to either party, in like manner as he himself is entitled to preference, if desirous to make the advance (v). Upon payment made into the bank, the banker's certificate is to be granted, by which the party making the payment are discharged from all liability, and such bankers' certificate being transmitted to the commissioners, they are to issue a grant of the rent charge, which is to commence from the day of the certificate (w).

In the case of the money being advanced by the owner of the land himself, the commissioners, when satisfied that the money has been duly expended upon the drainage works, or upon any part which is in itself complete, and upon the expenses thereof (including the expenses of the application), and that the works are durable and will produce an improvement in the yearly value, exceeding the amount of the yearly rent charge, are to make a grant of a rent charge to such owner of the land for the period above stated, and which is to commence on the day on which such money shall be reported to have been duly expended (x). The rent charges so to be granted are to be kept down by the tenant for life, as if the same were the interest of a mortgage and are to have precedence over all other charges, except tithe rent charges, land tax, local rates and taxes, quit or chief rents incident to tenure, and charges created or to be created by virtue of any act authorizing advances of public money, for drainage or the improvement of lands (y). But no arrears are to be recoverable after three years, nor any interest in respect of any arrears (2). The rent charge is to be recoverable in like manner as the tithe commutation rent charge under the 6 & 7 Wm. 4, c. 71; but with a saving as to parties, who, at the time of the commencement of the rent charge, were tenants for lives or years not within the meaning of "owner" of

(t) Sects. 1, 2, 9; how could it be otherwise?

(u) Sect. 4.

(v) Sects. 7, 8.

(w) Sects. 8, 9.
(x) Sect. 10.

(y) Sects. 13, 21.
(z) Sect. 18.

lands (a), and who did not concur in the application for the loan; as to whom the owner of the rent charge is only to have the ordinary remedies of a legal reversioner (b). And if the lands are in a register county the grant of rent charge must be registered, or otherwise be subject to be postponed (c). But such rent charge is not to be considered an incumbrance such as to preclude trust money, held upon trusts of investment, being laid out in the purchase of a mortgage upon such lands (d). The act also contains power for the commissioners, where the amount to be raised is contributed in different sums, to charge distinct parts of the land with distinct rent charges, and also to apportion any one rent charge, when desirable, between different parts of the land already charged with it under the act (e). The act also provides, that when the owner of land charged with a rent charge under the 9 & 10 Vict. c. 101, shall redeem such rent charge under that act; the commissioners may by the certificate of redemption, declare that such rent charge shall continue a charge for the remainder of the term for which it was created and pass as personal estate (f); and also further amends the previous acts (g), by declaring that the certificates of advance, under those acts, need comprise only such parts of the lands specified in the provisional certificate, as the commissioners may think proper; and that the provisions in the act of the 11 & 12 Vict. c. 119, as to description by reference shall apply, as far as circumstances will admit, to that case (h). The act also contains a provision as to the mode of payment of the costs of the drainage works and of the expenses of the commissioners and their officers (i), and a provision as to the mode of applying any part of the sum so to be raised, which shall remain unapplied, (either from the works not having been fully executed or from a surplus remaining after the full execution of 'the works), in indemnifying the parties interested in the land from the rent charge, but in the first mentioned case not giving in the first place the party who applied for the loan the benefit of such indemnity until all others have been indemnified (k).

(a) Vide supra, 6 & 7 Wm. 4, c. 71. (b) Sect. 15.

Sect. 14.

(d) Sect. 20.

(e) Sects. 11, 12.

f! Snat, 20

(g) 9 & 10 Vict. c. 101; 10 & 11 Vict. c. 11; 11 & 12 Vict. c. 119.

(h) Sect. 31.

(i) Sects. 6, 24.

(k) Sect. 25.

APPENDIX.

Master of the Rolls.-17th November, 1834.

PEACOCK V. BURT (a).

Mortgage-Tacking-Notice.

A second mortgagee cannot, by giving notice to the first, prevent a third mortgagee from obtaining a priority over his security, if the latter advance his money without notice of the second mortgage, and afterwards obtains the legal estate by buying up the first mortgage.

The third mortgagee being a purchaser for valuable consideration, is not bound by the notice to the first mortgagee. ATKINSON, in March, 1810, executed a mortgage in fee to one Cade; further advances were afterwards made, and by indenture of the 14th of May, 1814, the mortgage was transferred to, and the estate became vested in fee in John Burcham, subject to redemption on payment of 7,8007., and interest.

By indenture of 3rd and 4th December, 1815, after reciting the mortgage to Burcham, Atkinson conveyed the same property to Thomasine Smith in fee, subject to redemption on transferring to Mrs. Smith the sum of 2,1007. Navy Five per cent. Annuities.

It appeared that soon after the execution of this mortgage, Mrs. Smith wrote, and sent to Mr. Burcham, the first mortgagee, the following letter:

"Mr. Burcham,

66

"Lincoln, December, 1815.

Sir, I understand you have a mortgage on the estate of M. Atkinson, of Fulbeck, for 6000l., and it being necessary that you should be informed I have just got from him a second mortgage for 20004, which was left to me by my late husband, Samuel Wood, if my writing to you, Sir, is not sufficient, I shall esteem it a favour if you will inform me."

Burcham afterwards advanced the further sum of 900%. to Atkinson, and which, by an indenture of the 13th of February, 1816, he charged on the same property. Atkinson, the mortgagor, subsequently persuaded the plaintiff, Peacock, to advance the sum of 12,000l. on the security of

(a) This and two following important cases have been furnished the author by the kindness of Charles Beavan, Esq. of

the Chancery Bar, who has permitted the author to use his name in pledge of their accuracy.

the property, on having a transfer of Burcham's mortgage; and accordingly, by indenture of the 12th and 13th May, 1817, and made between Burcham, Atkinson, and Peacock, in consideration of 8,7007, paid by Peacock to Burcham, and of the further sum of 3,3004, paid by Peacock to Atkinson, the premises were conveyed to Peacock in fee, subject to redemption on payment of the sum of 12,0002, and interest; and afterwards, in 1823, Atkinson charges the property with the further sums of 1000% and 8007. to Peacock.

On a reference to the Master it appeared that the estate was insufficient to pay all these incumbrances, and a question was then raised, whether Peacock was entitled to a priority to the whole extent of his security, over the mortgage to Mrs. Smith, or whether his priority was limited to the sum of 7,8127., the amount due at the time Mrs. Smith gave notice of her security to Burcham.

Peacock insisted that he, having no notice of Mrs. Smith's mortgage at the time he advanced his money, and possessing the legal estate and the title deeds, was entitled to a priority for the whole of his advances over Mrs. Smith's security, and the Master reported in his favour. To this report Mrs. Smith took exceptions.

Mr. Bickersteth and Mr. Wakefield for Mrs. Smith. The first mortgagee was, in respect of the equity of redemption, a mere trustee for the mortgagor, and those claiming under him, and all interests subsequently created by the mortgagor are mere equities. It is now clearly settled, that as between persons having equitable interests, he who first gives notice to the trustee gains a priority, Dearle v. Hall (b), Loveridge v. Cooper (c). Sir Thomas Plumer there lays it down, that 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 vested, then, by giving notice, the legal holders are converted into trustees for the new purchaser, and are charged with responsibility towards him.

It is clearly proved by the depositions of Mr. John Burcham that he received notice from Mrs. Smith of the mortgage, and being a mere trustee of the equity of redemption, his conscience became bound by that notice, and he was from that time a trustee for Mrs. Smith, and could not by any subsequent act of his own alter the equities between the parties.

Mrs. Smith has been guilty of no negligence or laches; she has done all that a party in the situation of second mortgagee could do; she cautioned Burcham against any act which might prejudice her right, and, as the plaintiff claims through Burcham, he must, therefore, be subject to the same equities as Burcham himself.

Pemberton and Bethel, for Peacock. We admit that Burcham had notice of the mortgage to Mrs. Smith, but that does not in any degree affect the rights of Peacock, for he had no notice; and a purchaser for valuable consideration can protect himself against every claim, if he has but the legal estate. Under these circumstances, he is entitled to defend

himself either at law or in equity, against the defendant, who is a mortgagee, and a purchaser pro tanto. To hold that a mortgagee is a trustee of the equity of redemption, would be to overrule all the law laid down on the subject. It was the very ground of the decision in Cholmondeley v. Clinton, that he was not a trustee. It is quite an error to suppose the notice is binding on all parties claiming by assignment; for a purchaser for valuable consideration can, in all cases, protect himself by the want of notice in any of the intermediate parties. The case of Brace v. The Duchess of Marlborough is conclusive of the question now raised, for there it is laid down, that if a party had no notice at the time of advancing the money, he may tack, even pending a suit, at any time before decree. The cases of Dearle v. Hale, and Loveridge v. Cooper, are decisions respecting pure equitable interests, and depend upon principles peculiar to themselves: ours is a legal title.

MASTER OF THE ROLLS (d).-The question is, whether a third mortgagee, who has advanced a further sum to a mortgagor, without notice of a second mortgage, and obtains a conveyance of the legal estate from the first mortgagee, who had notice of the second mortgage, can obtain a priority over the second. It is proved in this case, that the second mortgagee gave notice to the first, but not to the third mortgagee, and I think that the real question is, whether he is or is not a purchaser for valuable consideration, without notice. It is said, that though he had no personal notice, yet he is affected with the notice of the vendors, but the knowledge of a vendor has never been held to bind a purchaser for valuable consideration, without notice; and against this application of the rule, there is no exception. It is true, that in Mackreth v. Symmons, Lord Eldon asks the question, "Is there any case where a third mortgagee has excluded the second, if the first mortgagee, when he conveyed to the third, knew of the second? When the case of Maundrell v. Maundrell was before me, I looked over, but could not find such a case, that where there was bad faith on the part of the first mortgagee, that equity was applied." It appears from the report, that Sir Samuel Romilly seems to have assented to this proposition; but the answer to the question put by Lord Eldon, is to be found in those various cases which have settled, that up to the time of a decree, and pending a suit, a third mortgagee can buy up the first, and obtain a priority over the second; Marsh v. Lee, 2 Ventr. 337; Brace v. Duchess of Marlborough, 2 P. Wms. 491; Belchier v. Butler, 1 Eden, 523; Belchier v. Renborth, 5 B. P. C. 292. It is clear that these cases furnish a decisive answer to Lord Eldon's question, and, in fact, to give a third mortgagee who has obtained a legal estate, a priority over the second, nothing further is necessary but that he had advanced his money without notice of the second mortgage, and this priority may be obtained even during the pendency of a suit; the equities of the two parties being equal, this Court, on that account refuses to interfere, not because he has better, but because he had an equal right. It appears that Mr. Powell, in the second volume of his Treatise on Mortgage, states the same objection, and he cites Whalley v. Whalley,

(d) Lord Cottenham.