Vol. 12 · pages 246–250

225COMMON LAW actual notice of such instrument or matter but not necessarily of its contents. (ii) Where inquiry is purposly avoided to escape being bound by notice. 1. John Towsey contracted for the purchase of certain property in 1776. 2. He borrowed the amount of purchase money from one Dr. P, and placed the title-deeds in his hands as a security for repayment. 3. In 1790, T was very much indebted to one Ellames in a considerable sum of money and executed a mortgage of the same property to Ellames. 4. Dr. P did not give any information of his claim to Ellames. 5. Ellames said that he made no inquiries after the title-deeds before he took the security, and admitted that upon executing the mortgage he inquired for them, and was informed of their being in the hands of Dr. P. but that he understood them to be so for safe custody only. 6. He received this information from one J. who was his brother-in-law, who had prepared the mortgage and appeared as his agent at the time of the execution of it. 7. Dr. P claimed priority over Ellames. It was granted as Ellames was held to have had notice. (iii) Where there is gross negligence in not making usual and proper inquiries : 1899. 2 Ch. 264 1921. 1 Ch. 98. Imputed Notice 1. The underlying theory of agency is that a man can do a thing by an agent which he can do himself. Conversely, what is done by the agent is done by him. This being so, it is open to argument that what is known to the agent must be taken to be known

226 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES to the Principal. This is the theory on which the doctrine of imputed notice is founded. The Essentials of Imputed Notice 1. The knowledge must have come to him as an agent and not in any other capacity. In other words, agency must be strictly proved. Dyllie vs. Pollen—32 L. J. Ch. 782 (N. S.) 2. Agent must be distinguished from a person employed to do merely ministerial act— e.g. a person employed to procure a deed is an agent. Knowledge to such a person cannot be the basis of imputed notice. 3. In this connection, the position (of)* a person who is in the service of two Principals as their agent has to be considered. Suppose, there are two companies, A and B, and C is an officer employed in both A & B. Suppose that A company transferred their legal right to B company which was subject to an equitable right in favour of D of which C had knowledge. Can D say that B company had notice of his equitable right because C, their agent, had notice of it in his capacity as the agent of A? The answer is that, his knowledge which had acquired as agent of A company, will not be imputed to B company unless he owes a duty to the A company to communicate his knowledge and also a duty to the B company to receive the notice. (1896) 2 Ch. 743— In Re Hampshire Land Company. Facts : 1. Hampshire Land Company was registered under the Companies Act, 1870. 2. The Company was closely interconnected with the Port Sea Island Building Society. Four Directors and a Secretary by name Wills were common to both. Inserted—ed.

227COMMON LAW 3. On the 19th February 1881, a general meeting of the Company was held at which a resolution was passed authorizing the Directors to borrow 30,000 £. 4. The Directors borrowed this amount from the Port Sea Society. 5. The Society went into liquidation in 1892. The Liquidator of the Society sought to claim the sum of £ 30,000 lent to the company. 6. It was contended that the resolution of the company authorizing borrowing was ultra vires and that because William, the Secretary was a common officer notice to him was notice to Society and therefore Society could not recover. 7. Held that the Society could recover for reasons at p. 749. II. The notice to the agent must have been obtained by him in the same transaction and not in a previous transaction. There is a further qualification. Even if the notice was acquired by the agent in the same transaction, it will not be imputed to the purchaser, unless it is so material to the transaction as to make it the duty of the agent to communicate it to the principal. (1886)—31 Ch. D. 671—In Re Cousins. Facts : 1. In 1871, one William’s cousins made a will of his property and left it in trust to his trustees. 2. One William Banks was a solicitor for the trustees. 3. Mathew, a cousin was to receive a share in the proceeds of real and personal property left by William’s cousins under the will. 4. Mathew mortgaged his share to William Banks, the Solicitor as security for a loan of £ 35. 5. In 1873, Mathew mortgaged his share to William Richardson through Banks and Banks was paid off. 6. In 1874 Richardson transferred his mortgage to William Drake. No Notice was given to the Trustees.

228 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES 7. In 1875 Mathew mortgaged his share to Dennis Pepper to secure a payment of £ 500. Banks acted as the Solicitor. The mortgage to Dennis Pepper did not mention the previous mortgage to William Drake, Subsequently a notice of this transaction was given to the Trustee. 8. Drake took out a summons for payment of his mortgage debt due from Mathew out of the funds in the hands of the Trustee in priority to Pepper’s claim. 1884, 26 Ch. D. 482 9. Pepper’s contention was that, he had no notice of Drake’s claim—Mathew not having mentioned it in his deed of mortgage. 10. It was replied by Drake that Pepper had notice because Banks, the Solicitor who acted as his agent knew of Mathews mortgage to Drake. 11. That Banks had notice, it was not denied. That Banks was the agent of Pepper was not denied. But the question was whether notice to Banks can be held to be notice to Pepper. 12. Held: No—p. 677. Reasons. The knowledge of Banks did not arise in the course of the transaction with Pepper in 1875. Pepper could not be said to have any notice. 13. Pepper’s claim was allowed. III. Notice to agent will not be imputed to the purchaser when the agent is shown to have intended a fraud on the principal which would require the suppression of his knowledge and not communicate it to the Principal. (1880) 15 Ch. D. 639 Cane vs. Cave. (1428) ACI—Houghton & Co vs. Nothard) II. Where an equitable right has come into being subsequently to the acquisition of a legal right. 1. Leading case on the question is Northern countries of England Fire Insurance Co. vs. Whipp. 1884 26 Ch.D.482

229COMMON LAW Facts C, the Manager of a company, executed a legal mortgage to his company, delivered title-deeds. They were kept in a safe of the company, the key to which was in C’s possession: C— some time after took out the title-deeds and created another mortgage on the same property in favour of Mrs. Whipp. Mrs. Whipp has no notice of the first mortgage to the Company. Held : Company entitled to priority. 2. The proposition laid down in the case is this— Where the owner of a legal estate has assisted in or connived at the fraud which has laid to the creation of a subsequent equitable estate and the owner of equitable estate had no notice of the prior legal right, the Court will postpone the legal estate to the equitable estate although it is subsequent in its origin. 3. What is the evidence of assistance in or connivance at fraud : (i) Omission to use ordinary care in inquiry after title-deeds. (ii) Failing to take delivery in title-deeds are treated as evidence of assistance in or connivance at fraud where such conduct cannot otherwise be explained. 4. The same authority lays down another case in which also a legal estate will be postponed to a subsequent equitable estate. Where the mortgagee, the owner of the legal estate has constituted the mortgagor, his agent with authority to raise money on the property mortgaged and the estate created has by the fraud or misconduct of the agent been represented as being the first estate. 5. For the operation of this rule, mere carelessness or want of prudence on the part of the legal owner will not be a sufficient ground. There must be fraud and connivance at or assistance therein. Nothing but fraud I will postpone. (1913) 2 Ch. 18. III. Where the competition is between two equitable rights.