independent loan of money of the estate to the legatee personally, and for which it would have a set-off had George himself brought suit for the legacy. Considered as a loan, this transaction was a loan of moneys of the estate upon improper security, and, as appears by the evidence, it was arranged between George B. and the executor, with the consent of the other children. It was probably made with the expectation that it would be repaid to the estate before any legacy became payable to George, as similar loans of larger amount had previously been paid.

had notice, and upon George, the legatee, stating that such inquiries, if made by him (the attorney for the Finance Company), would not procure the desired information, the attorney suggested that the legatee himself procure the information and turn it over to the Finance Company. George B. accordingly procured from the trustee the following letter to himself, which he afterwards delivered to the Finance Company: "Dec. 1, 1904. Mr. George B. Jenkinson, 2nd, South Orange, N. J.-Dear Sir: If it will be of any assistance to you and help you pay off the Bernheim claim and settle with the Newark Banking Company, I am very willing to state that to the best of my knowledge and belief the two assignments you made to the Fidelity Trust Company and the National Banking Company respectively are the only ones

ing, and beyond that the only other papers I recall affecting your interest in the estate, are those in connection with the suit of the Hamilton National Bank, by which I am restrained from paying you the annuity. Yours truly, R. C. Jenkinson, Ex'r."

[3] But, inasmuch as George's right to the $30,000 was expressly contingent on his living until the time for payment, there can be no question that the loan of the estate funds was a breach of trust, and at the personal risk of the executor, who protected himself of which I have received a notice in writby securing the consent of the other children. Under these circumstances, neither George nor any person claiming under him, by assignment or otherwise, has any right to claim payment of his share under the will, except upon the terms of making good or accounting for the amount improperly taken. There can be no question, I think, that, if George himself were claiming the legacy, the executor would be entitled to deduct the moneys received, and, so far as the mere right to deduct by reason of the advance goes, there is no reason for making a distinction between George and those claiming under him. Their rights can be no greater than his.

[4] An assignee from a cestui que trust who is a debtor to the estate cannot claim the beneficial interest without discharging the debt. 2 Lewin on Trusts, *696. The right of the estate to be protected against breaches of trust by the trustee is enforced even to the extent of holding the assignment by a legatee who is also the trustee, to be subject to the liability of the trustee to make good all breaches of trust, as well after as before the assignment. Morris v. Lure, 1 Y. & C. ch. 380 (1842); Knapman v. Reford, 18 Ch. Div. 300 (1880, C. A.). As the debt due from George to the estate was payable on demand, the equity of the estate for payment arose immediately and continued until the debt is paid.

[5] The Finance Company and Banes, its assignee, claim, however, that special equities exist between them and the executor, which entitle them to insist that as against them, and, because of the circumstances under which the assignments to them were made, the executor is estopped from claiming the right to retain, as against either the first assignment now held by Banes, or the second assignment. The facts relied on to sustain this claim of estoppel are these: George B. applied to the Finance Company to raise money by sale of a portion of his share in the estate. The attorney for the Finance Company desired a statement from

What statements were made by George B. to the trustee, upon the faith of which the letter was obtained, does not appear; but, as bearing on the question of estoppel, it will be noticed that in this letter there was no reference to the amount of any assignment proposed to be made, and it would appear from this letter that the executor supposed the money proposed to be procured by the legatee by the assistance of his letter was to pay the Bernheim claim, $6,250 and interest, and that of the Newark Banking Company, the amount of whose claim does not appear, but who already had an assignment. The Finance Company on the receipt of this letter from George made their first purchase, paying $10,000 for a $15,000 portion of the estate, without further inquiry of the trustee or information to him about their proposed purchase. And in the following March (1905) without any further inquiry or information, it made the second purchase of $15,000, paying therefor $10,000. The assignments to the Finance Company formally transferred to the extent of $30,000 George's entire interests, legal as well as equitable and either vested or contingent, under his father's will, including the legacy of $30,000. It is now claimed that, by reason of the executor's omission to state in this letter that the estate held a claim arising out of the loan to George now in question, the executor and the estate he represents are now estopped from setting up the claim for retention against either the first or second assignment. Considering this claim purely on the basis of the principles of estoppel, my view would be that the letter, the only act of the executor on which the estoppel is based, should not be held to estop him from setting up the claim for payment of the amount

any such effect, it should be shown, I think, | due on the loan to George before making that the attention of the executor was directed payments under any of the assignments. to the matter of the amount of the assignment to be made. This might have called to his attention the question of the effect of it on the claim of his estate, which seems to have escaped his attention and at the moment was not recalled "as a paper affecting George's interest in the estate." The Bernheim claim for which the money was to be raised was under $7,000, and there was no apparent reason for referring to the estate's claim for $5,000, even if it was in the executor's mind. But, as the letter itself shows, the claim on the note, whether from carelessness or want of recollection, was not at the time considered as a paper or notice of the kind about which information was de sired.

[6] Second. I come now to the principal question, that relating to the priorities as between the assignees of the fund. In its general aspect, the question involved is that of priority between successive assignees of a legacy or equitable interest, when the assignee prior in point of time has omitted to give notice to the trustee of the assignment by the cestui que trust or beneficiary, and the beneficiary has made subsequent assignments of the same interest to assignees in good faith and for value, without notice of the prior assignment, and the subsequent assignees have themselves successively given notice to the trustee of their respective assignments. This general question of the necessity of notice to the trustee in order to preserve priority against subsequent assignees in good faith is one of great practical importance, and of wide scope, inasmuch as it involves the settlement by the court of equity of the formalities or rules (if any) necessary to be observed in order to retain the full benefit of the acquisition of a species or class of property which the court itself has created as being equitable interests, and has also invested with the character of assignability.

[7] Legal estates and interests in chattels or lands are assignable by rules fixed either by common law or statute, and one of the principal objects of the recording acts is to regulate the priorities between successive grantees or mortgagees.

[8] In the absence of statutes, the general rule applicable to such priorities is the fundamental maxim relating to the transfer of the title to property, "Qui prior est tempore potior est jure." As to equitable interests and estates in lands (strictly so called), there is no question, I think, that, so far as they are not within the recording or other statutes, equity follows the same general rule.

As to the second assignment made in March, there can certainly be no basis for holding the executor to be estopped. Had an inquiry been made of him before this advance, he might have recalled and mentioned the claim. To hold him bound by estoppel for all future transactions between George and those with whom he dealt on the basis of this letter and without further inquiry from the trustee would stretch' the principles of estoppel beyond all reason. But, without placing the decision upon this point, my view in reference to the whole question of estoppel is that the executor, who was acting merely as trustee, has no authority either in George's favor or that of his assignee to estop himself as trustee from afterwards asserting the rights of a trustee in the administration of the estate, and that any waiver of the right to deduct from George's share the amount improperly advanced from the estate funds would of itself operate to assist in a breach of trust. Such breach of trust could not have been properly effected, even by a direct agreement between the trustee and George or his assignee. Nor would this court ratify or carry into effect any such agreement. Much less could it be effected by the appli- [9] The equitable doctrine of notice is not cation of the doctrine of estoppel. Equitable applicable to the conveyance of equitable indoctrines are established for the purpose of terests or estates in lands. Jones v. Jones, enforcing equities, not to destroy them. If 8 Simons, 633 (Shadwell, V. C.); Hopkins v. there was any misrepresentation in the let- Hemsworth, [1898] 2 Ch. 347, 351 (Kekewich, ter of the complainant, or any failure, through J.); 2 Pom. Eq. Juris. (3d Ed.) § 683, note negligence, carelessness, or otherwise, to as-2, § 713. sert the claim of the estate to deduct the [10] Where the assignments are of lega$5,000 loan from George's share, for which cies, which are in their origin purely equitamisrepresentation or failure the writer of the ble interests, King v. Berry, 3 N. J. Eq. 44 letter was responsible to the Finance Com- (Vroom, Ch., 1834), Kennedy v. Parke, 17 pany, the writer was responsible only per-N. J. Eq. 415 (Green, Ord., 1864), or of funds sonally. The estate in the executor's hands was not and could not be bound by way of estoppel not to assert its rights against George, and it cannot be made to suffer for the executor's letter to George. Other persons than George and the executor are interested in the retention and have never waived their right to it, and, as now repre- [11, 12] These discussions have occurred in senting all persons interested in the estate, a great variety of cases-sometimes where

in the hands of trustees, or like purely equitable interests, much discussion has arisen in reference to the effect of failure of notice by the prior assignee and the rule to be established in such case as well as to the equitable principles upon which it should rest.

In this state of the authorities I shall not examine any of the cases in detail, except the English cases, where the doctrine of notice originates, and those in our own courts. Counsel upon both sides rely upon decisions of our own courts as settling the question in favor of their respective contentions and an examination of these at some length will therefore be necessary.

volved has not been involved, and, as deci- | the English and American cases is given in sions, the opinions are obiter dicta. Such 66 L. R. A. p. 760, etc., in a note to the case cases are those where the question arose be- Re Phillips, 205 Pa. 515, 55 Atl. 213, 97 Am. tween the prior assignee and the trustee who St. Rep. 746 (1903), in which it was held had made payments from the fund either to that as between successive assignments of the assignor or a subsequent assignee, with- a fund in the hands of a third person, the out notice of the prior assignment. In this one which, being acquired without notice of case there is, I think, no difference of opin- prior assignments, is first brought to the ion that the trustee paying without notice knowledge of the depositary is entitled to is protected. In others the subsequent as- priority. Other collections of the cases are signee was a claimant whose only right was 2 A. & E. Ency. (2d Ed.) 1077; 4 Cyc. 77, that of the assignor and who stood exactly note 82; and 19 Yale Law Journal, 258, Feb., in the shoes of the assignor, subject to his 1910, on Notice of Assignments in Equity, by equities; e. g., a judgment or attachment E. Q. Keasbey. creditor, or assignee under insolvent laws or other involuntary assignments for the benefit of creditors. As to these, also, while there is some difference of opinion, the clear weight of authority is, I think, that the prior assignment, so far as the assignor and such adverse claimants under him are concerned, is complete and effective without notice, and the claimant by the subsequent assignment, whose estate is necessarily, by the circum- In the leading English case-Dearle v. stances of its creation, only that of assignor, Hall, 3 Russell, 1 (1827, Plumer, M. R.)— is also subject to the prior assignment. where the doctrine of priority according to This is the rule settled in our courts. Board notice was first laid down, the grounds were of Education v. Duparquet, 50 N. J. Eq. 234, stated, and one of these grounds (for two or 242, 24 Atl. 922 (1892, V. C. Pitney), approved three are given) is the ground upon which in Miller v. Stockton, 64 N. J. Law, 614, 622, the rule has been finally rested in England 46 Atl. 619 (Err. & App. 1905); Cogan v. and those courts which adopt the same rule. Conover Mfg. Co., 69 N. J. Eq. 809, 64 Atl. In this case, set out fully in 2 Pom. Eq. Jur. 973, 115 Am. St. Rep. 629 (Err. & App. 1905). § 695, note 1, the beneficiary of a sum of The real difference of opinion in the courts money invested in the name of trustees asarises when the subsequent assignees claim signed it for value to the complainant, who to stand upon a footing, which gives rise to gave no notice of the assignment to the trusthe application of what is claimed to be a tee. Subsequently the beneficiary assigned special and peculiar equitable principle as his interest in the fund to another purchaser, against the prior assignee who has failed to who purchased in good faith and inquired give notice. The special equity now alleged of the trustee, as to any prior incumbrance to exist against the prior assignee is one or sale before making the purchase. The claimed to arise by reason of his conduct in second assignee gave notice of his assignment. failing to give notice, and, in the considera- The bill was filed by complainant as prior astion of the question, those cases in which signee against the trustee and the second assome further special circumstances existed signee; the trustee not having paid the benegiving rise to equities in favor of the subse- ficiary or either of the assignees. The case quent assignee, other than the mere failure was twice argued, and the Master of the to give notice, may be treated as not deci- Rolls in the course of his opinion referred sions on the question in hand. The division to several considerations as grounds or reaof opinion among courts and judges as to sons for preferring the subsequent assignee whether any special equity arises from this with notice to the prior assignee who had mere failure to give notice is very great. neglected to give notice. One of these was One set of courts follows what is sometimes that, if the purchaser of an equitable intercalled the English rule, that the special est desired to have his right under his purequity does exist, and that notice of the as- chase to attach upon the subject of the consignment to the trustee is necessary in order tract instead of being merely a contract perto preserve priority. These include the Unit-sonally binding the assignor, notice to the ed States Supreme Court-Iowa, Missouri, trustee must be given. Unless such notice and Pennsylvania. Courts in which the general rule that priority in time gives priority in right seems to have been adopted are among others those of Indiana, Kentucky, North Carolina, Massachusetts, and New York. In several states both rules seem to have been applied at different periods, and it is only in the later decisions that the question has been finally settled in the respective

be given, all was not done which was essential in the transfer of title to personal property as under the law of England personal property passes by delivery of possession, and it is possession which determines the apparent ownership. If, having the right of possession, this right is not exercised and another is left in actual possession, he is enabled to obtain a false and delusive credit.