James Barr Ames

“ What the cestui que trust really owns is the obligation of the trustee; for an obligation is as truly the subject-matter of property as any physical res. The most striking difference between property in a thing and property in an obligation is in the mode of enjoyment. The owner of a house or a horse enjoys the fruits of ownership without the aid of any other person. The only way in which the owner of an obligation can realize his ownership is by compelling its performance by the obligor. ”

“ Such a destruction of the assignee’s right would be a tort, and a court of equity would, at the instance of the assignee, either restrain its commission or compel the assignor to surrender to the assignee whatever he had collected of the obligor. This is the real significance of the statements, sometimes made, that a power, though revocable at law, is irrevocable in equity, and that a chose in action is assignable in equity, although not assignable at law. In the absence of any actual or threatened tort the assignee of a chose in action was entitled to no relief in equity ”

“ If, however, an assignment is a power of collection and substitution, it follows that in the case of a fraudulent assignment this essential feature of an estoppel is wanting. There is an identity between the real and the apparent fact. The fraudulent assignee not only purports to have, but actually has, the power of collection and substitution. He is in duty bound, it is true, not to exercise the power to the prejudice of his assignor; but his duty is the same as that which fastens upon the conscience of a fraudulent vendee of land not to convey the land to the detriment of the vendor. ”

“ The general duty resting upon all mankind not to destroy the property of another, is as cogent in favor of an obligee as it is in favor of the owner of a horse. And the violation of this duty is as pure a tort in the one case as in the other. ”

“ For example, if a trustee should, in violation of his trust, contract to sell the land to A, receiving the purchase money at the time, or should make an equitable mortgage by deposit of the title-deeds, and should afterwards, in discharge of his obligation, convey the legal title to A, the latter could not be charged with the prior equity; [67] for one who takes a legal title in discharge of a claim against the transferrer is a purchaser for value. ”

“ In all the cases hitherto considered, the legal title, or other legal right of property, it has been assumed, was acquired at the time of the purchase. But he who advances money on the faith of a legal title that he already has, is equally entitled to protection. Thus, a first mortgagee, who makes subsequent advances in ignorance of a second mortgage, has priority as to those advances over the second mortgagee. [28] He is in the same position as if he had surrendered his first mortgage and taken a fresh conveyance of the legal estate to secure the whole of his advance. ”

“ Where one who purchased an equitable interest in property, without notice of a prior equitable incumbrance of the plaintiff, has subsequently got in the outstanding legal title. This was the doctrine of tabula in naufragio. (3.) When a plaintiff seeks to charge a purchaser with “an equity as distinguished from an equitable estate, as, for example, an equity to set aside a deed for fraud, or to correct it for mistake.” ”

“ The fact that a defrauded vendor of a chattel is allowed to maintain trover against the fraudulent vendee has given a certain currency to the opinion that the protection of an innocent purchaser of a chattel is due to the principle of equitable estoppel. ”

“ Closely akin to a lessee’s right is the interest of a pledgee. His right is a legal right in rem, and fundamentally different from the lien of an equitable incumbrancer, which is a right in personam. The innocent pledgee of a chattel may, therefore, retain his pledge until the claim thereby secured is satisfied. ”

“ Lord Westbury, in his opinion, arranged the cases in which the plea of purchase for value would be a bar to equitable relief in three classes: (1) When an application is made to the auxiliary jurisdiction of the court. As illustrations under this class were mentioned bills for discovery and bills for the surrender of title-deeds belonging to the plaintiff. ”

“ V.⁠In cases where the rule of priority in time would otherwise determine the rights of adverse equitable claimants, it sometimes happens that the later incumbrancer subsequently acquires the outstanding legal title. ”