Page:Harvard Law Review Volume 1.djvu/17

 important qualification, namely, that the equities of the adverse claimant must be immediate equities against the same person. There are many illustrations of the rule thus modified. For example, B, an express trustee for A, sells, without conveying the legal title, to C, who pays the purchase money without notice of the trust. Or B makes an equitable mortgage to C. Again, B, a fraudulent vendee, i.e., a constructive trustee, of A, sells, without conveying the legal title, to C, or gives him an equitable mortgage, or declares himself a trustee for him. In all these cases A and C have each an immediate equity against B. In all of them C must be postponed, because, in fact, no interest in the land passed to him by B’s conveyances. B could not convey A’s equitable interest as such, although he might have destroyed it by conveying the legal title, and he did not, as he might have done, convey his own legal interest.

But the rule as to conflicting equities, it is conceived, may be expressed more comprehensively. Just as the honest purchaser of a legal title from one who holds it subject to an equity acquires the legal title discharged of the equity, so also the purchaser of an equitable title from one who holds it subject to an equity takes the equitable title discharged of the equity. In all other cases the rule of priority governs, unless modified by the principle of estoppel. As the proposition here advanced has the merit, or, perhaps it should rather be said, the demerit, of novelty, it will be necessary to examine the true nature of an equitable right of property.

A cestui que trust is frequently spoken of as an equitable owner of the land. This, though a convenient form of expression, is clearly inaccurate. The trustee is the owner of the land, and, of course, two persons with adverse interests cannot be owners of the same thing. 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