PURCHASE FOR VALUE, IN GOOD FAITH AND WITHOUT NOTICE. The pro tection given to such purchaser means that from the relation subsisting between the two parties, especially that which is involved in the innocent position of the purchaser, equi ty refuses to interfere and to aid the plain tiff in what he is seeking to obtain, because it would be unconscientious and inequitable to do so, and the parties must be left to their legal rights, liabilities and remedies ; 2 Pomeroy, Eq. Jur. § 738. It is of the essence of the doctrine that equity does not intend to pass upon and decide the merits of the two litigant parties ; it does not decide that the title of the defendant is valid, and, there fore, intrinsically better than that of the plaintiff ; on the contrary, the protection giv en by way of defence theoretically assumes that the title of the purchaser is really de fective as against that of his opponent; a court of equity wholly ignores the question of validity, declines to examine into the in trinsic merits of the two claims, and bases its action upon entirely different considera tions. If a plaintiff, holding some equitable right, sues to enforce it against a defehdant who has in good faith obtained the legal es tate, the court refuses to interfere and do an unconscientious aet by depriving him of the advantage accompanying such an innocent acquisition of the legal title. On the other hand, if the plaintiff is the legal owner, and sues to obtain some equitable relief against a defendant who is the innocent holder of some equitable right or interest, the court in like manner refuses to aid the plaintiff and leaves him to whatever rights would be rec ognized and reliefs granted by a court of law. The doctrine is not in any sense a rule of property. Whenever the relations between litigants are of such a nature and the suit is of such a kind that equity is called upon to decide the merits of the controversy and de termine the validity and sufficiency of the opposing titles or claims, then it does not admit the defence of bona fide purchaser as effectual and conclusive. See 2 Pomeroy, Eq. Jur. § 739.
In the leading case of Phillips v. Phillips, 4 D., F. & J. 208, Lord Westbury classified as follows the cases in which purchase for value would bar equitable relief : 1. When an application is made to the auxiliary ju risdiction of the court. 2. Where one who purchased an equitable interest in property, without notice of a prior equitable incum brance 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 equita ble estate, as, for example, an equity to set aside a deed for fraud, or to correct it for mistake." On the other band, to a bill in voking the concurrent or exclusive jurisdic tion of equity against a subsequent equita ble incumbrancer, purchase for value with out notice would be no defense.
Prof. Ames (Lectures on Legal History, 253) points out that one common case of protection to a purchaser is where one buys a legal title from a misconducting trustee without notice of the trust, and that this does not come within any of these classes, and that the discrimination in the third class between an equity and an equitable estate is an unfortunate one. He states the doc trine as follows : "A court of equity will not deprive a defendant of any right of property, whether legal or equitable, for which he has given value without notice of the plaintiff's equity, nor of any other com mon-law right acquired as an incident of his purchase. In all other cases the circum stance of innocent purchase is a fact of no legal significance." In cases where the rule of priority in time would otherwise decide the rights of ad verse equitable claimants, it sometimes hap pens that the later incumbrancer subse quently acquires the outstanding legal title; but it has long been decided that a later in cumbrancer could derive no advantage from a long outstanding term got in with notice of the prior equity. This is called the tabula in naufragio doctrine. Prof. Ames points out that it may fairly be said that that doc trine survives only in the unjust and much criticized English rule of tacking.
He sums up the discussion of the general doctrine as follows : "The purchaser of any right, in its nature transmissible, whether a right in rem or a right in personam, acquires the right free from all equities of which he had no notice at the time of its acquisition. This proposition, it is hoped, will find favor with the reader in point of legal principle. It can hardly fail to commend itself on the score of justice and mercantile convenience." Prof. Langdell (Summary of Equity Plead ing) has discussed the subject, but somewhat from the standpoint of equity pleading. See, also, Bispham, Equity.
To constitute one a purchaser for value, without notice, the whole consideration must be actually paid before notice, and it is not enough that the consideration was secured to be paid. American Vulcanized Fibre CO. v. Taylor (Del.) 87 Atl. 1025.