Markham v. O'Connor

McCay, Judge. 1. So far as this case turns on the evidence, we do not, under the rule we have so often announced, undertake to pass upon it. The statements of the witnesses are conflicting, and it is the province of the jury to determine between them. That the weight of the proof may be against the verdict, does not, if the judge below has refused, justify this court in disturbing it. There is a good deal of evidence supporting the verdict, and if the charge was right, and the refusal to — 196 — charge as requested, proper, the verdict ought to stand. The charge, as given, was in substance as follows : That if Markham was present at the sale, if it was announced by the auctioneer that the title was perfect, and clear or unincumbered, and he (Markham) failed to make any correction of said announcement, ¡fad O’Connor bought under the impression that he was getting an unincumbered title, and took a deed, and paid his money under such impression, Markham is estopped from setting up his mortgage as to O’Connor, even though the mortgage was duly recorded at the time of the sale. Was tliis charge right? Very certainly, there was evidence to support it. Several of the witnesses testify almost in the words of the charge as to the character of the announcement, and though others do not give exactly the same version of it, yet if there was any evidence putting the terms of the announcement as strong.as it is put in the charge, that will justify the charge. The whole charge is not set forth in the record, but we must assume that all of it that is claimed to be error is here. We assume, therefore, that the judge told the jury that the converse of the proposition stated was true. That if the facts proven failed to come up to the charge in any of the particulars stated, as to the presence of Markham-, as to the character of the announcement, as to his failure to correct it, and as to the belief and action of the purchaser, then Markham would not be estopped. At last, therefore, the legal question in the charge resolves itself into this: Is a mortgagee, who has his mortgage-duly recorded, if he stand by at a public sale of the property, hear a public announcement that the purchaser will get an unincumbered title, and say nothing, estopped from setting up his mortgage against one who buys at such sale, and pays his money under the impression that he is getting a good and unincumbered title? Our Code, in express terms, defines constructive fraud to consist in any act of omission or commission, contrary to legal or equitable duty, trust or confidence justly reposed, which is contrary to good conscience, and operates to the injury of another. The last clause of the section adds, that the latter— — 197 — constructive fraud — may be consistent with innocence: Code, sec. 3173. The only difference between this case and the case of Markham vs. Hunnicutt, 43 Georgia, is that then Markham said it was good property. That was an act of commission; this is an act of omission. Section 2966 of the Code puts acts of omission, where it is one’s duty to interfere, on the same footing as acts of commission. It is in these words ; “A fraud may be committed by acts as well as words; and one who silently stands by and permits another to buy his property without disclosing his title, is guilty of such a fraud as estops him from subsequently setting up such title against such purchaser.” This section of the Code is not only a condensed 'exposition of the law as it exists, but is the deduction of enlightened reason and justice, upon the facts supposed. Nobody would for a moment hesitate to say that if A, being about to buy an estate, should inquire of B whether it was unincumbered, and B should reply that it was, that B would be estopped ever afterwards to set up an incumbrance to the injury of A. Nor is the estoppel less strong on principles of justice and equity, if the fact be that B stand by and say nothing, when another, in his presence and hearing, asserts that property about to be sold is the property of the seller. The case, then, is within that other familiar rule of evidence, as expressed by the Code, section 3790, that “acquiescence or silence, when the circumstances require an answer or denial, or other conduct, may amount to an admission” — a principle founded in common sense and common honesty, and administered day by day in courts of justice, not only in settling questions of property, but in deciding upon matters involving liberty and life. Was it Mr. Markham’s “legal or equitable” duty to have spoken, under the circumstances and announcements put by the judge, and as detailed by at least some of the witnesses ? Was it contrary to good conscience, supposing it was then his intent to insist upon his mortgage, to keep silence? Had he a right to consider that he had done enough when he had put his mortgage upon record? Very clearly, under our law, (Code, 2966,) if one stand silently by — 198 — and permit another to purchase his property from a third person without disclosing his title, it will not be a reply to say his title was upon record. At any rate, the broad language of the Code, section 2966, has got no such qualification. Why should the fact that his interest in the premises is as a mortgagee and not as owner make any difference? I take it that the authorities, though it must be admitted that they are not in harmony, may in the main be harmonized, if we consider the principle on which the doctrine is based. They all go on the idea that it is a man’s equitable duty to interfere by the assertion of his right when he sees some one about to act upon the truth of a denial of that right. In the case where one, in the presence of the true owner, and with his knowledge, sets up a title to property and sells it to another, there is a direct denial of the true owner’s right. The sale, without more, is antagonistic to the title of the true owner. And if he stand silently by and permit the sale without announcing his right, he is estopped. This I think is the uniform current of the authorities: Kerr on Fraud and Mistake, 126; 5 Min., 530; 19 Wend., 557; 5 Leigh, 1; 2 Ala, 514; 34 Ver., 598; 1 John’s Chancery, 344; 6 Ibid., 268; 7 Watts, 394; 7 Ibid., 163. But when the right set up is only a lien or incumbrance, the simple sale of the title is not inconsistent with the lien; mere silence, in the presence of such an act, will not estop; one is not bound upon all occasions to give warning to .incautious people. He has a right to assume, if nothing appear to the contrary, that the purchaser has been informed of the lien, has examined the record, and that the sale and purchase are in view of the truth of the case. But suppose more is done than a mere sale; suppose, as is the case put by the judge, it is evident from the facts that the sale is under an announcement directly in the teeth of the mortgagee’s claim. Is it not just as much his duty to prevent the fraud as in the case of an assertion of title adverse to his title. Had this sale taken place with no announcements except that Sells was the true owner, there would have been nothing in this antagonistic to the mortgage, and Markham might well rest upon his record, talc — 199 — ing it for granted that the seller was acting in good faith, and that the buyer had examined the record and knew of the mortgage. But when it was (if it was) announced that the property was to go to the purchaser free from incumbrance, “ clear and free from incumbrance,” was not this an announcement in the teeth of Markham’s claim, supposing he then intended that his lien should continue. If Sells did have it announced that the property was free from incumbrance, and it was not, he was, under our law, guilty of a crime. For it is a crime in this state “if one, in the sale of real or personal property, shall defraud another by falsely representing that it is not subject to any lien or mortgage, knowing the same to be subject:” Code, sec. 4599. Had not the bystanders in this case, even supposing that every one of them had heard of the mortgage, a right to suppose that Sells was not committing a crime ? Was it not a fraud if Markham stood by and heard such announcement and kept still ? Was it not a breach of his legal and equitable duty and contrary to good conscience to stand by and permit, not only his neighbor to be defrauded, but a crime to be committed, he knowing what was going on, and able, by a mere word of his, to prevent it ? The crime and the fraud in the case would be the sale by Sells, under the announcement that the purchaser would buy the property free from incumbrance, he knowing to the contrary '. If Markham and Sells did, at that time, know that the purchaser would not get the property free from incumbrance, then Sells was guilty of a crime, and Markham, by his silence, put it in his power to commit that crime. Assuming that Mr. Markham did then intend to insist on his mortgage, even after the property was sold, we think he was guilty of an omission to perform a legal and equitable duty which the principles of good conscience cast upon him, to the hurt of O’Connor; and this is true, though he may have intended no wrong. We do not think, therefore, there was error in the charge. 2. Was there error in the refusal to charge? The request was, in substance, that in order to find against the mortgage, the jury must be satisfied that Markham intended by his — 200 — silence to commit a fraud. It has been argued eloquently and strongly that fraud is always a question of fact and intent, and must necessarily be a matter for the determination of a jury, and that the refusal of this request was a virtual withdrawal of the question of fraud, and especially of the intent of Markham, from the jury. This line of argument forgets the distinction between actual and constructive fraud, so pertinently and concisely put by our Code, section 3173. The latter, as the Code says, “ may be consistent with innocence.” A man may be guilty of it who did not think he was doing wrong. The fraud in this case, if there be fraud, is the very kind of fraud which the Code says may be consistent with innocence, to-wit: constructive fraud. Mr. Markham may not have intended any wrong, he may not have known that it was his equitable duty to prevent Sells from defrauding his neighbor, and that he had no right to stand by and see O’Connor buy under an announcement that he would get the property free from incumbrance, when he knew there was an incumbrance. Or it may be that Mr. Markham had faith in Sells, and expected to have his mortgage paid out of the purchase money. In either event he would have intended no fraud', and yet he would be just as much estopped as if he had acted with a deliberate intent to commit a fraud. It would be a constructive fraud, a fraud in law, though the party was innocent. The request, therefore, was calculated to mislead the jury. The true doctrine was put in the charge'as given. Markham, under the circumstances as supposed, would be es-topped, not because he was guilty of an intended fraud at the time of the act, but because it would be a fraud, if, acting as he did, he should nozo have the benefit of the mortgage, assuming that the announcement was made, as some of the witnesses say, that the property was sold clear and free from incumbrances. We think it was Mr. Markham’s duty, if he intended to insist on his mortgage, to let the truth be known, either at the bidding, or to notify the purchaser before the title was made, or the notes given, or money paid. If he failed to do any of these things, we do not say that he was — 201 — guilty of a fraud in not doing so. .But the law, in our judgment, is that if he failed, as stated, it would be a fraud to set up his mortgage now; that he is estopped; that the law holds him to the implied admission he then made, either that his mortgage was settled, or that there was some arrangement between him and Sells by which he would get his nioney out of the proceeds of the sale. He may have intended no wrong at the time. It is the setting up of his mortgage now that is wrong. Hence, we think the request was properly refused. Judgment affirmed.