Murphy v. Nathans

The opinion of the court was delivered, February 25th 1868, by Strong, J. This was an action of ejectment, brought by Rebecca Nathans against Michael Murphy and his wife Margaret Murphy, to recover the possession of a lot of ground in the borough of Pottsville. The lot belonged to the plaintiff prior to, and until the 10th of September 1847. On that day articles of agreement were made between her agent, Nathan Nathans, and Michael Murphy, by which it was agreed that she should sell the lot to — 512 — Michael Murphy for the sum of $2000, of which he covenanted to pay one-fourth cash, and the remainder in three equal annual payments, which, with the interest on them, were to be secured by bond and mortgage on the premises. Five hundred dollars wrere paid by Murphy on account of the purchase, and on the 18th day of October 1848, the second instalment of $500, with the interest upon the whole, was also paid by him, ánd a deed was made to Robert Woodside, who executed a mortgage to Rebecca Nathans for $1000, a sum equal to the remaining purchase-money. The evidence given at the trial tended to establish that the deed was made to Woodside at the request of Michael Murphy, and that Woodside acted as the agent of Mrs. Murphy. The mortgage was not recorded until some years afterwards. On the 26th day of October 1848, nine days after the deed had been made to Woodside, and after he had executed and delivered the mortgage to the plaintiff, he conveyed the lot to Mrs. Murphy by deed, reciting a consideration of $2000 paid. In reference to this conveyance, Mrs. Margaret, Foy, the mother of Mrs. Murphy, and a witness produced on the part of the defendants, testified that she negotiated the purchase from Woodside for the sum of $2000, that she paid the whole consideration ($2000) to him in October 1848, and directed the deed to be made to her daughter Margaret Murphy; that the deed was so made, and delivered to the witness in the presence of Mrs. Murphy, and that she, Mrs. Foy, had no knowledge of the existence of a mortgage on the property to Rebecca Nathans. Such was the title under which the defendants resisted a recovery in this action. The title of the plaintiff was as follows : In 1856, proceedings were instituted upon the mortgage above described, given by Woodside to Rebecca Nathans, and judgment was duly recorded against Woodside’s personal representative, he having deceased. A levari facias was sued out upon the judgment, a sheriff’s sale of the mortgaged premises was made to the plaintiff, and a sheriff’s deed was given to her on the 4th day of June 1857. ' Such being the condition of the titles of the parties, it is manifest that the right of the plaintiff to recover depends upon the question whether Mrs. Murphy knew of the mortgage given by Woodside, at the time when the conveyance was made by him to her, unless the fact, if it be a fact, that Mrs. Foy paid the purchase-money for her daughter, without notide of the mortgage, enables Mrs. Murphy to defend under her. The court beloiv instructed the jury that this did not put Mrs. Murphy in any better position than she would be in if she had made the purchase and paid the money herself, if she knew at the time the deed was delivered to her, of the existence of the mortgage from Woodside to the plaintiff. This it is insisted was error, and it is argued — 513 — that Mrs. Foy having negotiated the purchase and paid the purchase-money, without notice of the unrecorded mortgage, is to be regarded as the real purchaser, though the deed was made to her daughter by her direction; that there was a resulting trust in favour of Mrs. Foy, Mrs. Murphy holding the legal but not the beneficial ownership, and that the latter is therefore in the same situation as Mrs. Foy would be in, had the deed from Woodside been made directly to her. The argument is unsound. Mrs. Foy can in no sense be regarded as a purchaser, although she conducted the negotiation, and paid the consideration. She took no title either legal or equitable. The legal title passed by the deed to Mrs. Murphy, and the payments of the purchase-money raised no resulting trust in favour of Mrs. Foy. No doubt the general rule is, that when an estate is purchased in the name of one, but the purchase-money is actually paid at the time by another, a trust results in favour of him who pays the purchase-money. The existence of such a trust may be disproved, however, or rather the legal presumption of its existence may be destroyed in many ways. In most cases it is effectually rebutted by proof that the person who pays the consideration for the grant is the parent of him to whom the deed is made. When such is the relationship of the parties, the law raises no resulting trust in the grantee, or, as it is sometimes said, it presumes that the payment of the money was an advancement rather than the creation of a trust. Other circumstances combined with the payment of the consideration by a parent will sometimes enable a court to declare that a trust was intended, and induce the court to enforce it. But in the present case there is no pretence that anything exists to shake the presumption that when Mrs. Foy paid the price of the lot to Woodside, if she did pay it, and directed the deed to be made to Mrs. Murphy, her daughter, the transaction was anything more than an advancement. It gave Mrs. Foy no equitable interest. It was the same in effect as if the money had been given to the grantee in the deed, and by her paid to the grantor. Now, when it is remembered why it is that a purchaser for valuable consideration, with notice of a prior unrecorded mortgage, takes the land purchased subject to the mortgage, it is plain that Mrs. Murphy cannot protect her possession under Mrs. Foy. The recording acts are substantially statutes against frauds. They were intended to protect bond ficle purchasers for value, and mortgagees against prior secret sales and encumbrances, not to be themselves instruments by which the first vendees or mortgagees may be defrauded. The mischief intended to be remedied is well described in the preamble to the statute of 7 Anne, ch. 20, which is in substance: “ Whereas, by the different and secret ways of conveying lands, &c., such as are ill-disposed have it in their power to commit frauds, and — 514 — frequently do so, by means whereof several persons have been undone in their purchases and mortgages by prior and secret conveyances and fraudulent encumbrances.” Then follows a provision for the registry of deeds and conveyances, with an enactment that they shall be adjudged fraudulent and void against any subsequent purchaser or mortgagee for valuable consideration, unless a memorial of them be registered as directed by the act. An unrecorded mortgage is good at common law. It is to protect a subsequent bond fide purchaser, or a subsequent bond fide mortgagee, that the statute postpones it. It is that he may not be deceived by a false appearance; that he may not be injured by a secret prior conveyance or mortgage. If the junior grantee knows of the first mortgage, though -it be unrecorded, if he has such knowledge when he takes his deed, he cannot be injured. The mortgage is not secret as to him, and hence he is not within the protection of the statute. He is not a bond fide purchaser. In the leading case of La Neve v. La Neve, Ambler 436, Lord Hardwicke declared the ground of the rule that a second purchaser for value, with notice of a prior unrecorded encumbrance, shall take subject to it, to be plainly this: “ That the taking of a legal estate after notice of a prior right, makes a person mala purchaser; and not that he is not a purchaser for a valuable consideration in every other respect. This is a species of fraud and dolus malus itself; for he knew the first purchaser had a clear right to the estate, and after knowing that, he takes away the right of another person by getting the legal estate. * * * Now, if the person does not stop his hand, but gets the legal estate when he knew the right was in another, machinatur ad circumveniendum. * * Fraud or mala fides, therefore, is the true ground on which the court is governed in the cases off notice.” And in the same case it was laid down that notice to an agent or attorney of the second purchaser, is notice to the purchaser himself. The doctrines of La Neve v. La Neve are the unquestioned doctrines of courts of equity now. The courts interfere on the ground of fraud, and the fraud consists in taking a deed from a prior mortgagor, and using it to defeat the mortgage, when it was known at the time the deed was taken that the mortgage had been given. It is in the grantee’s not “stopping his hand.” His act is giving voluntary aid to the grantor’s efforts to sell what he has already sold or mortgaged, and thus depriving the first purchaser or mortgagee of the fruits of his bargain. To prevent this, equity declares that such a grantee shall not set up his deed to the prejudice of the holder of the prior right, the maxim being “fraus et dolus nemini patrocinan debent.” It is clear, therefore, that if at the time when Mrs. Murphy obtained her deed from Woodside, she knew of the mortgage given nine days before to the plaintiff, the recording — 515 — acts would only be an instrument of fraud if she may use them to protect herself in the enjoyment of the land by right superior to the mortgage. It was fraud in her to take the deed for anything more than the grantor had left to convey, and it would be fraud in her to use the deed to the hurt of the mortgagee. There was no error then in submitting the case to the jury on the question whether Mrs. Murphy, at the time she purchased and received the deed from Woodside, knew of the mortgage to Rebecca Nathans, with the direction that if she did, the plaintiff was entitled to recover. It might be added that if, as Mrs. Foy testified, Mrs. Murphy was present when the1 purchase-money was paid, and the deed to her was delivered, she could not innocently conceal her knowledge of the prior mortgage, permit the money to be paid, a deed to be made out to her, and then claim to stand in the position of a bond fide purchaser. Nor could the court have affirmed any of the points proposed by the defendants below, without manifest error. If the evidence given at the trial is believed, it leaves no reasonable doubt that Mrs. Murphy knew well of the mortgage to Rebecca Nathans, when she took the conveyance from Woodside. Indeed the proof is, that 'Woodside was her agent in the transaction, made so doubtless for the very purpose of giving the mortgage for the remaining purchase-money unpaid to Miss Nathans, rather than having it given by herself, a married woman. She said Woodside was her agent. So did Woodside himself, and so did Michael Murphy her husband, through whom a part of the original purchase-money was paid. It is true, the title of a bond fide purchaser is not to be affected by vague and indefinite rumours, but the evidence in this case is most direct and positive that the agent of Mrs. Murphy had notice, and, when all considered, it is hardly less positive that she knew of the mortgage herself. It was then quite impossible for the court to charge the jury that the plaintiff could not recover. And clearly it could not have been affirmed that a written acknowledgment by Mrs. Murphy that she knew of the mortgage when she took her deed, and that it was understood she should pay it, was of no effect, no matter when it was made. We discover ño material error in the admission of evidence. The agreement between Nathan Nathans, who acted as an agent for Rebecca Nathans, and Michael Murphy, followed as it was by proof of Murphy’s partial payments, and of the deed to Wood-side made at Murphy’s instance, by proof that Mrs. Murphy said Woodside was her agent, and by his subsequent conveyance to her, was admissible as a link in the chain of title, and as showing the agency of Murphy himself. It may be, that if the testimony of Mrs. Foy be assuriied as verity, and a complete account of the — 516 — transaction, the agreement was superfluous and perhaps irrelevant. But it was not for the court to ignore the theory of the plaintiff, supported as it was by evidence, and rule out what tended to confirm it. It may be admitted, as was decided in Snyder v. Sponable, 1 Hill 567, s. c. 7 Id. 427, that notice of a prior unrecorded mortgage given to the husband, will not affect the wife when she is a purchaser for value; but if the husband acts as her agent in the acquisition of her title, notice to him is notice to her. Now, when it is observed there was evidence that Michael Murphy bargained for the lot for the price of $2000; that he paid half of the purchase-money, and then directed a deed to be made to his clerk, who acted as an agent for Mrs. Murphy; that Woodside, the clerk of the husband and the agent of the wife, then gave a mortgage for the unpaid purchase-money, to which Murphy was a witness; that Mrs. Murphy joined her husband in requesting it should not be recorded, saying the money would be forthcoming for the whole; that nine days after _ Woodside made a deed to her; that subsequently she declared in writing it was understood at the time of the conveyance that the property was subject to the mortgage, and that it was to be paid by her; and still more, that two years afterwards she paid interest on the mortgage by her own check; there can be but little doubt that both Woodside and her husband were her recognised agents. At least the jury might well have inferred such an agency from this evidence. And if it existed, the acts and declarations respecting the mortgage, to which objection was made, were those of the grantees. Taking the evidence as a connected whole, we are of opinion that it was rightly received. The only remaining assignment of error is that the verdict is erroneous. This is not assignable for error. It is probably meant that the court erred in entering judgment on the verdict as found. The jury found in favour of the plaintiff, with six cents damages and six cents costs, but attached to it a condition that the verdict should be set aside on the payment by the defendant of the amount of the mortgage, with interest on or before a day specified. It must be admitted this was not a ease for a conditional verdict. The defendants had either a clear legal title or nothing. They had no equity to be protected. But the opportunity given to them to redeem the land, is not a matter of which they can complain. It was an error in their favour. In fact this part of the verdict was mere surplusage, the finding of an immaterial matter. It has not in any manner injured the defendants. It does not stand in the way of their trying the title in a new ejectment, if they think it worth the trial. We cannot reverse the judgment for this reason. The judgment is affirmed.