Smith v. . Fuller

MANNING, J. The defendant Mrs. Isabella R. Fuller admits that the public sale of the land of her husband by his executors was a proper and legal exercise of their powers under his will; that the deed to her was regular and vested in her the legal title to the fee in said land; that she did not pay any part of the consideration reci'ted in the deed to her, but her son-in-law, Whitley, advanced the money for her and in his account as executor charged himself with said sum and accounted for its disbursement. Mrs. Fuller executed a mortgage to Whitley to secure the payment of the purchase money advanced by him. In 1899, not having herself, as she admits, paid a cent of the mortgage debt, she made, a deed to Whitley, witnessed by her son, by which she conveyed to him the fee simple in said land, and on the day the deed was offered for probate Whitley canceled of record the mortgage. Whitley took possession of the land and F. G. Fuller rented it from him; he paid rent therefor and Mi’s. Fuller lived with her son. In December, 1903, Fuller still occupying the land as tenant, Whitley sold for value — a fair and reasonable price — to Allen K. S.mith. It is not charged that Smith had any notice other than such as the law charged him with by reason of the recorded deeds and his own deed from Whitley disclosed. Assuming that Smith, before purchasing, examined the records of the county in which the land is situate, to ascertain his chain of title and the existing liens affecting the title, these records would have been discovered: (1) the will of Joseph Fuller; (2) the dissent therefrom of his widow, Isabella R. Fuller; (3) the deed from his executors (executing a power of sale) to Isabella R. Fuller; (4) the deed from Mrs. Fuller to Whitley for $2,000; and (5) the deed from Whitley to himself, referring to the deed f-rom Mrs. Fuller. It is not denied that the deed from Mrs. Fuller conveyed in form and in terms the unconditional fee simple in the land. If Smith had inquired of the man in actual possession, he would have ascertained the following facts: (1) That Frank G. Fuller, the coexecutor of Joseph Fuller, the son of Mrs. Isabella R. Fuller, the subscribing witness to her deed to- Whitley, occupying the land as the tenant of Whitley and paying him *12 rent as tenant, and bis mother (through, whom all the defendants would work out their claims and equities) living with her son, in apparent contentment, and demanding nothing except that she be permitted to live at the old place and in her old home until her death; that the relation of lan'dlord and tenant between Whitley and Fuller had continued for more than four years without dispute and without the suggestion of any other right or equity. The examination of the tax books would have disclosed to Smith the payment of taxes by Whitley and the listing of the land by him. The answer of the defendants expressly admits that Whitley was in possession of the land; that his possession was uninterrupted and that he received the rents and profits; and the defendants seek, by and through this admitted possession of Whitley, to charge him and his vendee — the plaintiff — with the rents and profits; hud, in this way, they claim that the mortgage debt has been practically discharged and they have thus become enti-tied to the land. Conceding the soundness of the principle established by the decided weight of authority, that possession by a person other than the vendor, when such possession is open, notorious and exclusive, puts a purchaser upon inquiry and is notice of every fact which he could have learned by proper inquiry (as held by this Court in Edwards v. Thompson, 71 N. C., 177; Staton v. Davenport, 95 N. C., 12; Tankard v. Tankard, 79 N. C., 54; ibid., 84 N. C., 286; Bost v. Setzer, 87 N. C., 187; Johnson v. Hauser, 88 N. C., 388; Mfg. Co. v. Hendricks, 106 N. C., 485; Patterson v. Mills, 121 N. C., 258), yet the admitted actual possession was consistent with the paper title, and the possession of plaintiff’s vendor was open, notorious and exclusive. It is therefore clear that an inquiry by the plaintiff as to the actual possession of the land and the character of that possession would not have discovered to him any right or equity inconsistent with his vendor’s legal title; the possession followed the legal title and was in harmony with it. . Notice by possession of lands never extends beyond the rights of the occupant and of those under whom he claims. Roll v. Rea, 50 N. J. L., 264. It is not contended that the present plaintiff’s ancestor, the vendee of Whitley, had any other notice than 'such as the record disclosed and such as the law impressed upon him by such records, to wit, constructive notice. It is not shown by the evidence nor is it alleged that the vendee, Smith, even made an examination of the records) but his title would nevertheless be affected by any infirmity disclosed thereby. *13 It is not contended tbat tbe consideration recited in any of the deeds is inadequate and certainly not so inadequate as to put the purchaser upon inquiry, as in Durant v. Crowell, 97 N. C., 367. It is, however, earnestly contended that the presence on the records of the canceled mortgage of Mrs. Fuller to Whitley fixed the plaintiff, Smith, the purchaser, with notice of the relationship of mortgagor and mortgagee between them, and the subsequent deed from this mortgagor to this mortgagee was presumptively fraudulent, and Smith, therefore, was .bound to inquire at his peril as to whether the deed was executed freely, without oppression and for a fair and reasonable consideration. It will be observed that the entry of satisfaction of the mortgage on the record of its registry was made by Whitley, the mortgagee; was in proper form, and was made more than four and one-half years before Smith purchased. This is not the case of the attempted cancellation of a mortgage or deed of trust by a person not authorized to make the entry of satisfaction. An existing, uncanceled mortgage, properly admitted to registration, is constructive notice to subsequent purchasers of the mortgaged premises of the rights of the mortgagee; but a mortgage or deed of trust properly canceled by a person authorized to cancel it,. is notice to no one; it continues no lien upon the property. On the contrary, the entry of satisfaction by the proper person is conclusive of the fact of its discharge and satisfaction. A mortgage registered in a manner not authorized by law has been frequently held by this Court to be neither actual nor constructive notice. De Courcy v. Barr, 45 N. C., 181; Todd v. Outlaw, 79 N. C., 235; Duke v. Markham, 105 N. C., 131, and cases approving that case cited in the annotated edition. The purpose of requiring registration of a mortgage is to give notice to others dealing with the mortgaged premises during the life of the mortgage, of the rights of the' mortgagee and the transfer of the title of the mortgaged premises to the mortgagee. Collins v. Davis, 136 N. C., 106. It is no purpose of the registry acts to protect the rights of the mortgagor. Upon what principle can a subsequent purchaser of property, once covered by a mortgage, but which, long before he deals- with it, has been properly canceled and the entry of satisfaction properly entered on the record, be held to- a notice of it, in his examination of the records to ascertain the then condition of the title of the property he is negotiating to purchase? If at that time it is not an existing charge upon the property (and the entry of satisfaction by‘ the proper person is to him conclusive that it is not), he has absolutely no concern with it; and no statute and no adjudication of any court that we have discovered re *14 quires him to observe it, or affects him with constructive notice of its presence on the books, and assuredly none of any equities dehors the deed growing out of a relation once existing, but by the entry of satisfaction properly made conclusively determined, as to him. It was never contemplated that such a burden should he imposed upon a person negotiating for the purchase of real property, that he should' examine not only the record .of cancellation of all recorded mortgages, hut should, read them and he affected with notice of the relationship of mortgagor and mortgagee created by them, and to inquire as to the facts and circumstances and conditions of such relationship. This result would be contrary to that public policy so well expressed by Avery, J., in the following language: “It has been repeatedly declared to be sound public policy to remove every obstacle to the ready sale of real estate upon the market, in order to benefit commerce and thereby promote general prosperity. It was in furtherance of this object that our General Assembly, hut a few years since, so altered our registration laws that iiersons proposing to purchase land could be well advised as to the title by a careful inspection of the public records.” Hughes v. Hodges, 102 N. C., 236 (240). The same policy was expressed with equal force and clearness by Connor, J., in Wood v. Tinsley, 138 N. C., 507 (575): “The purpose of the statute was to enable purchasers to rely with safety upon the examination of the records and act upon the assurance that, as against all persons claiming under the 'donor, bargainor or lessor,’ what did not appear did not exist. That hardships would come to some in applying the rigid statutory rule was well known and duly considered. * * * The change in our registration laws was demanded by the distressing uncertainty into which the title to land had fallen in the State. No one could say for himself or advise others with any certainty or safety in regard to a title.” It will be observed that neither in the deed from Mrs. Fuller to Whitley nor from Whitley to 'Smith is there any reference by recital or otherwise to the mortgage. It was not necessary to look for it in deraigning title; it was not a muniment of title. The other admitted facts in this case were calculated to negative its existence and to throw plaintiff’s ancestor off his guard, rather than put him on notice. It is undoubtedly true that if, in deraigning title, one deed refers to another, the purchaser is constructively hound by all that the deed referred to would have disclosed, and buys subject to any infirmity there discoverable. Such was the decision of the Supreme Court of Kansas in Frazier v. Jenkins, 57 L. R. A., 575, and the Michigan Court in McKay v. Williams, 57 Mich., 547 (55 N. W., 159); Winter v. Truax, 87 Mich., 324 (49 N. W., 604). *15 To McKay v. Williams, supra, it appeared that an attorney in fact had executed a deed to the land of his-principal and on the same day took back a deed to himself and a few weeks thereafter conveyed the land to another. It was thereupon held that the deed by the attorney and the deed back to him were prima facie fraudulent on their face; that they did not show the title had passed; that they imparted notice to the subsequent purchaser, and that title could be recovered in ejectment. The. other two cases cited were conveyances by a guardian of his ward’s land and reconveyance by the purchaser to the guardian. Froneberger v. Lewis, 19 N. C., 426. It will be observed that the vitiating fact necessarily appeared in deraigning the title, on the face of the deeds in the chain of title, and in one of the muniments of title (Holmes v. Holmes, 86 N. C., 205; Whitaker v. Fuquay, 127 N. C., 64). This fact alone is sufficient to distinguish those cases from the case now under consideration. Another point earnestly urged upon our attention by the defendants is that the deed from Whitley and wife to Allen K. Smith is a quitclaim deed, and being such, is notice to him (Smith) of the equities between Mrs. Fuller and Whitley. While some of the words of the granting clause of the deed would seem to support this contention, the habendum and tenen-dum clause is in the words of the usual bargain and sale conveyance, “to have and to hold the aforesaid tract or parcel of land and all privileges and appurtenances thereto belonging, to the said Allen K. Smith, his heirs and assigns, to his only use and behoof forever.” If the granting clause purports to grant only the right, title and interest of the grantors, it will be observed that the word “quitclaim,” the usual and appropriate word, is not used, and one of the purposes, as laid down by Blackstone, of the habendum and tenendum clause is to enlarge the estate granted. The warranty clause refers to the deed of Mrs. Fuller to Whitley — a deed absolute and unconditional in form, conveying the fee simple with full covenants of warranty of title; and Whitley and wife warrant the title only as conveyed by this deed. It may be they desired to insert a special and not a general warranty of title, but we cannot see how the language used can be fairly interpreted to convey notice to the vendor’s purchaser of the vendor’s fraud in acquiring the very land sold. In Mansfield v. Dyer, 131 Mass., 200, the Court said that taking a quitclaim deed is not of itself sufficient to charge the grantee with notice that the grantor’s title was procured by fraud. In Moelle v. Sherwood, 148 U. S., 21, the Court says: “The doctrine expressed in many cases, that the grantee in a quitclaim deed cannot be treated as a bona fide purchaser, does not seem to rest upon any sound principle.” *16 There is no question raised by the defendant Mrs. Fuller of the effect of the deed from the executors to her upon her right of dower, or the efféct of her deed to Whitley or of Whitley’s deed to the plaintiff’s ancestor upon her right of dower. After her dissent was filed, it seems that Mrs. Fuller took no further steps to have her dower allotted to her in the manner prescribed by law. After a careful consideration of all the authorities cited by the learned counsel for the defendants in their well-considered brief, we have reached the conclusion that there was no error in the judgment of the court below, and the same is Affirmed.