Morris v. . Herndon

Shephekd, C. J.: In Mason v. Williams, 66 N. C., 564, it is said by Rodman, J., that registration is not sufficient notice to prevent the operation of an estoppel in pais; but even were it otherwise, such constructive notice would not affect the rights of an innocent purchaser, if under the circumstances it was the duty of the owner to make known his claim or title. This doctrine of constructive notice when applied to estoppels, “ if correct at all (says Mr. Pomeroy, 2 Eq. Jur., 810), is correct only within very narrow limits, and must be strictly confined to cases where the conduct creating the alleged estoppel is mere silence. If the real owner resorts to any affirmative acts or words, or makes any representation, it would be in the highest degree inequitable to permit him to say that the other party, who had relied upon his conduct and had been misled thereby, might have ascertained the falsity of his representation.” In speaking of the same principle, Mr. Herman says (2 Estoppel and Res. Jud., 9627): “But this is applicable only in the case where the foundation of the estoppel is in silence or acquiescence, for when the *239 owner concurs in a sale by participating in it at the time, it becomes bis own act.” So it is said in Mason v. Williams, supra, that “the rule is that if a man so conducts himself, whether intentionally or not, that a reasonable person would infer that a certain state of things exists, and acts on that inference, he shall be afterwards estopped from denying it.” Without discussing the general doctrine as to the effect of mere silence, where there is registration, and leaving it as it stands upon our decided cases, and, conceding for present purposes the principle stated by the above mentioned authors, we think there was something more here than simple acquiescence, and that his Honor was correct in refusing to charge that, upon the whole testimony, the interpleader, L. C. Herndon, was not estopped to claim the property in controversy. The instruction must be treated as if it were a formal demurrer to evidence, in which case it is well settled that the testimony must be considered in the aspect most favorable to the opposite party. Gwaltney v. Timber Co., 111 N. C., 547. Viewed in this light, it was certainly a legitimate inference that L. C. Herndon was chiefly instrumental in bringing about the transaction, by virtue of which he insists that the claim of the plaintiff should be postponed to his own. The plaintiff had a first mortgage executed by J. R. Hern-don, and at the instance of the said L. 0. Herndon the plaintiff took another mortgage upon the same property to secure the same indebtedness. The effect of taking this last mortgage was, it is conceded, to release the first, and by this means it came about that a second mortgage held by the said Hern-don acquired the legal priority. Should he be permitted to avail himself of this advantage obtained under such circumstances? The plaintiff' had no actual knowledge of the said mortgage, and we think it was the duty of Herndon to inform him of its existence. He was not a mere silent bystander, but a participant in the entire transaction, and as the property was insufficient to secure the claims of both, it *240 was inconsistent with good faith and fair dealing that he should have encouraged the plaintiff by his silence to part with his existing security. The plaintiff had a right to infer from the conduct of Herndon that he at least had no claim which would necessarily or probably impair the security which was then being substituted, at his instance, for the plaintiff’s prior lien. This brings the case within the principles declared in the passages we have extracted from Herman, and Mason v. Williams, supra, wffiich are abundantly sustained by our own decisions, as well as other, authorities. Affirmed.