Constructive trust, a trust which the Court elicits by a construction put upon certain acts of parties. It arises upon a vendor's lien or charge upon land sold for unpaid purchase money, and generally, when an estate is subject to a trust or equitable interest or lien, and a person purchases it for value, with either actual or constructive notice of it, the estate will still be subject to the trust or equitable interest in the hands of such a purchaser.
The doctrine of constructive trusts also arises upon the renewal of a lease by a trustee, or person having a limited interest, in his own name, even in the absence of fraud and upon the refusal of the lessor to grant a new lease to the cestui que trust or expectant; for such renewed lease is held upon trust for the person beneficially entitled to the old lease or the expectant, in order to prevent persons in fiduciary situations from acting so as to take a benefit for themselves. This doctrine is extended to the renewal of leases by one of several persons or partners jointly interested, by an agent, mortgagor, or mortgagee, or by a person jointly interested with an infant, but, if the renewed lease turn out not to be beneficial, the person renewing must sustain the loss; if beneficial, the infant can claim his share of the benefit to be derived from it.
A renewing trustee, and a volunteer claiming under him, as well as a purchaser from him with notice, will be directed to assign the lease free from incumbrances, except a bona fide lease made by him at the best rent, and to account for the mesne rents and profits; but he will be entitled to be indemnified against his covenants with the lessor, and will have a lien upon the estate for the costs of renewal, and the expenses of lasting improvements with interest. See Keech v. Sandford, otherwise called the Rumford Market Case, (1726) 1 W. & T.L.C.; Lewin on Trusts, ch. x. Reference to trusts in the Settled Land Act, 1925, include constructive trusts, s. 117 (xii) ibid., and see the definition in the T. Act, 1925, s. 68 (17)
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