Pilcher v Rawlins (1872) 7 Ch App 259

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  • Pilcher is a trustee
  • He is approached by Rawlins, who wants to borrow money
  • Pilcher agrees, and executes a common law mortgage (transaction thus far has been OK)
  • Pilcher and Rawlins then decide to defraud people, and they borrow money from S&L, fraudulently omitting the document showing the earlier mortgage – therefore they could only give away what they had (which was very little, really)
  • Pilcher reconveys the land to Rawlins without receiving payment for the mortgage, which is in breach of his fiduciary duty to the object of the trust
  • Rawlins executes the mortgage to S&L, meaning they are the legal owners
  • Who has better equitable title?
  • S&L were bona fide purchasers for value without notice; they had no reason to suspect the transaction wasn’t OK
  • Constructive notice does not extend to deeds removed from chain

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