Lessee of Heister v. Fortner

Ye ates J. The first question which presents itself for consideration in this case, is, whether the deed of assignment from Thomas Rees and wife to Charles Massey and others, dated 28th April 1789, not being recorded in Northumberland county within six months from its date, is not merely void to all intents andpurposes, except as betweenhim andhis trustees? This depends upon the words of the 8th section of the act, “ for acknowledging and recording of deeds,” passed in 1715, (1 St. Laws 112) which are as follow: “no deed or mort- “ gage, or defeasible deed,, in the nature of mortgages, here- “ after to be made, shall be good or sufficient to convey or “ pass any freehold or inheritance, or to grant any estate “ therein for life or years, unless such deed be acknow- “ ledged, proved, and recorded, within six months after the “ date thereof, where such lands lie, as herein before directed “ for other deeds.” It has been contended that this is a defeasible deed; because, if Rees, or any one in his behalf, had paid the debts intended to be secured thereby, or if part of the lands conveyed had been found sufficient for those purposes, equity would have decreed a reconveyance to Rees, and of course in our state the uses would have enured to his benefit. It is said, that the section under consideration is similar to sec. 1. of the statute 27 Hen. 8. c. 16, the words of which are, “ that no manors, lands &c. shall pass, alter, or “ change from one to another, whereby any estate of inhe- “ ritance or freehold shall be made or take effect &c. except li the same bargain and sale be made by writing indented, “ sealed, and enrolled &c. within six months next after the “ date of the same writings indented &c.” Under this statute it has been resolved, (a) that no estate passes until the deed — 43 — be enrolled; but when enrolled, it relates to the time of its execution, if no act has been done to prevent it. But it has never been considered under the recording act of 1715, that all deeds were to be recorded within six months, the words in the nature of mortgages, in the plural number, being construed to relate to all the preceding words in the sentence; and the point has been so adjudged in this court upon argument. Assuming this then as the true construction of the law, the only question is, whether this be a mortgage for securing the payment of money, within the intention of the act, or an absolute conveyance. It is certain that the debts due to the creditors formed the consideration of the deed, and with the nominal sum of five shillings, is so expressed therein; but it is also clear, that the trustees were vested with the complete legal estate, and were empowered to sell all or any of the lands in Northumberland county, in such convenient time as to them should seem meet, either by public or private sale, without the control or interference of the grantor. I fully admit the maxim, once a mortgage always a mortgage, (a) and that every mortgage is a conditional sale. (b) But mortgages are distinguished from defeasible purchases subject to a repurchase, (c) In this government, where a mortgagee would recover the money due to him, after default made by the mortgagor, the old act of 1705, “ for taking <£ lands in execution for payment of debts,” prescribes the mode of recovery by suing out a scire facias, “ after the ex- “ piration of twelve months next ensuing the last day whereon “ the mortgage money ought to be paid, or other conditions _<£ performed,” and then proceeding upon the judgment by levari facias. It will not be pretended, that proceedings of this kind could regularly be had upon the deed under consideration, or that the trustees could not proceed to a sale of the premises conveyed, without the instrumentality of a court of record: and thinking as I do, that mortgages recoverable under the provisions of the former act of 1705, are alone comprehended by the 8th section of the recording — 44 — act of 1715. I am of opinion, that the not recording of this deed in the proper county within six months from its date, does not affect its binding force. ' The second question is, whether the recording of this deed upon the 26th February 1790, operates as constructive notice of its contents, to the lessor of the plaintiff in the present ejectment.' The deed was acknowledged on the 29th April 1788, by Rees and his wife, before Frederick Augustus Muhlenberg, esquire, one of the justices of the Court of Common Pleas of Montgomery county, at which time no law of the state authorized such acknowledgment where the lands lie in a different county, nor was the recorder of Northumberland county authorized to place the same on record in February 1790. It is in vain to say that the law will presume the judicial officer to have competent authority, when it clearly appears to us by his style of office, that he had no such legal power. I by no means think that the doctrine of constructive notice should be extended beyond its settled limits. Lord Chancellor Redesdale in Lord Dunsany v. Latouche, 1 Scho. & Lef. 157, has said that if a deed in Ireland be unduly registered, it gains no preference thereby; and though his doctrine in that case has been affected by a subsequent decision in the Court of Exchequer, (a) I do not find that his observation in this particular has been questioned. The same thing is asserted by Mr. Sugden. He observes, it would seem that the courts might hold, without any violation of principle, that a purchaser should not be deemed to have notice of an equitable incumbrance, by the mere registry of it, unless it was duly registered (b). But the very point has been determined in the Supreme Court of the United States in 1805, in Hodgson v. Butts, (c) on error to the Circuit Court for the district of Columbia, that a mortgage of chattels in Virginia, not acknowledged or proved by the oaths of three witnesses, according to the laws of that state, though recorded, was void as against creditors and subsequent purchasers. A case, similar in principle, came before Judge Brackenridge and myself at a Circuit Court in Lewis Town in May 1801, between the Lessee of Joseph Simon and William Brown. There the plaintiff claimed the lands in controversy under an application in — 45 — the name of Robert Semple, assigned to Jos. Simon on the 18th January 1769. The defendant claimed under the same application which was assigned to William Plunket on the 3d May 1782. To shew a constructive notice to the defendant of this previous assignment to Simon, the certificate of its being recorded in Cumberland county, on the 26th March 1789, was offered in evidence. This defendant held under Henry Drinker, who had purchased from John Thornbrugh, on the 28th April 1795. The assignment to Simon was recorded on the oath of Solomon Ettlng, before Robert Maxwell, esq. then president of the Court of Common Pleas of Franklin county, that Semple had acknowledged the assignment to be his act and deed, and that certain persons were the subscribing witnesses thereto. The court held that the affidavit was informal and illegal, and did not authorize the recording of the assignment; it was no evidence whatever of notice to the defendant, and could not be received as such. Upon these authorities, Í hold that the lessor of the plaintiff cannot legally be said to have had constructive notice of the deed to the trustees, though placed on record by them, without having taken the necessary preliminary steps for that purpose. The remaining question is, whether a court of equity, under all the circumstances of this case, would afford relief to the trustees. . It has been strongly urged on the part of the defendant, that a judgment creditor is not within the meaning of the supplement to the act for acknowledging and proving of deeds, passed on the 18th. March 1775, 1 St. Laws, 703: that the original judgment of Weitner in Montgomery county was no incumbrance on the lands which lie in Northumberland county, and that the judgment on the scire facias was a mere nullity, being founded on one nihil returned, nor could it have been served either on Rees or the terretenants, who lived out of the bailiwick of the sheriff, and consequently the judgment entered thereon was radically.defective, being without notice: that this procedure of Weitner was in direct violation of his plighted faith, and fraudulent as to the other creditors of Rees, and therefore could confer no right: that if the trustees had known of the levy or sale of the lands, they could readily have obtained the sale of the lands to be — 46 — set aside, as well on the ground of irregularity in not serving the scire facias, as of WeitneFs written engagement; and that this being the first opportunity afforded them of contesting the matter, it should be taken nunc pro tunc: that this is substantially the same case as if the sheriff had levied on the lands of a stranger, whose deed had not been regularly recorded, because, as to Weitner, the lands were no longer subject to his execution, nor could he levy on them against his own stipulation; and that under the 4th section of the aforesaid, act of 1705, the sheriff’s vendee is to hold the land for such estate, as the debtor himself might could or ought to do, at or before the taking the same in execution. These arguments have some force, but more plausibility. They are, however, entitled to distinct answers, if such can be given. Unquestionably it is a case of hardship on either side; and where the loss shall be thrown, on solid legal principles, conducive of permanence to land titles and to the public security, is the great object of inquiry. I freely concede that a judgment creditor is not to be considered as a purchaser or mortgagee, within the words of spirit of the supplement to the recording act, passed on the 18th March 1775. Neither the preamble, enacting clause, nor exception, embraces the case of a judgment creditor; and if the legislature had meant to include such creditors, they would have so declared themselves in clear and unequivocal terms. This point was determined by Judge Smith and myself, at a Circuit Court held in Fayette county in October 1804, between the Lessee of James Rogers and John Gibson and others. Money, which is advanced on a mortgage, is parted with on the security of the lands; but a man is as often trusted on the security of his person and effects, as of his lands. But a purchaser under a judgment stands on a very different footing from the plaintiff in that action. I likewise agree, that the judgment on the scire facias in Montgomery county, was wholly irregular; and that the court from which the process issued, would without hesitation have set aside the sale, on both of the grounds alleged, if application had been made to them previous to the acknowledgment of the sheriff’s deed. The judgment also would have been reversed on error. Nevertheless, under the last section of the aforementioned act of 1705, “ if the judg47 “ ment had been reversed for error, the lands could not be “ returned, nor the sheriff’s sale thereof be avoided, but res- ' “ titution only should in such case be made of the money or “ price for which the lands were sold.” This is strictly agreeable to the principles of the common law, in case of the sale of a term for years in England., in order that sales by sheriffs may not be defeated, (a) provided the sale has been to a stranger. (b) The justice and regularity of the proceedings of one tribunal, can only be reexamined in a superior court, and cannot be reviewed or corrected by another tribunal collaterally in another suit. But if Weitner or his executors had become the purchasers at the sheriff’s sale, the trustees -might have taken advantage of the illegality of their proceedings, and of the fraud practised by him or them on the other creditors. Express notice also of the deed made to the trustees would be brought home to him by his written recognition thereof. It is the great prominent feature of this case, that neither direct nor implied notice of the assignment can be imputed to the lessor of the plaintiff. He was therefore a bona fide purchaser, and paid his money, confiding in the judgment of a court of competent jurisdiction, under a fair sale, and is entitled to protection under the words and spirit of the act of 18th March 1775. Having the legal estate in him, a court of chancery, between two equities, would not interpose to his disadvantage, but where the loss has happened, there would it be permitted to continue. It falls within the common rule, that where, of two persons equally innocent or equally blameable, one must suffer, the loss shall be left with him on whom it has fallen. Where there is equal equity, it is fully settled, the law must prevail. It has been decreed, that the registering of an equitable mortgage in Middlesex, is not presumptive notice of itself to a subsequent legal mortgagee, so as to take from him his legal advantage, (c) And I may be permitted to repeat what sir Joseph Jekyll said upon another occasion, (d) that under the special circumstances of this case, though Mr. Heister might have searched the records of Northumberland county, yet he — 48 — was not bound to do it, when the insertion. of the deed on the record was wholly unauthorized. When it is objected here, that the plaintiff can only succeed to the rights of Weitner, and can take no larger estate than Sees held at the time of the lands being levied, it must be remembered, that the judgment on the scire facias and the executions issued thereon, were not merely void but voidable; and that Heister remains uninfected with the slightest species of fraud, and an entire stranger to all the proceedings between the original parties. It will not be questioned, if Rees had sold these lands to an innocent stranger, who had acted with the most perfect good faith throughout the whole transaction, and had obtained the registry of his deed before the assignment had been duly recorded in the only manner known to the law, that such vendee would have been within the plain words and meaning of the supplement to the recording act. Now, to Weitner and his executors, the plaintiff is wholly a stranger, and whatever right or interest Sees could legally convey, the sheriff might levy on and sell, and his vendee coming in by act of law, would be entitled thereto. He cannot possibly be in a worse situation than if Sees had sold and conveyed; on the contrary, he might justly claim every preference which the policy of the law confers on purchasers at sales made by the officers of justice. Lord Hard. •wicke has said (a) that the rule is right, that whoever takes the assignment of a bond, being a chose in action, takes it subject to all the equity in the hands of the original obligee; but length of time and circumstances may vary that, and make the case of the assignee stronger. For these reasons, I am of opinion, that however unworthy the conduct of Weitner’’s executors may have been, (and it surely merits great reprehension, and will be viewed by every honest man with much indignation, if they really knew the facts) however irregular their proceedings, and however hard the case may bear on the creditors in general, the trustees can impute their loss solely to their own mistakes and negligence, and that their only remedy is either by writ of error on the judgment in Montgomery county, or by suit against the legal representatives of Weitner £ortheir gross — 49 — Misconduct. On the whole, I am abundantly satisfied that judgment should be entered for the plaintiff. Brackenridge J. In this case the title is admitted to have been in Thomas Rees, on the 28th April 1788. This title is alleged to be derived to the lessor of the plaintiff, through a judgment in favour of Abraham Weitner against Rees, on the 28th March 1789, in Montgomery county, upon which the executors of Weitner obtained judgment on scire facias the 9th February 1796; a testatum ji. fa. to Northumberland, issued upon this judgment, returnable to August 1797, and a testatum vend. exp. to November 1797, upon which the lands in question were sold to Heister by the sheriff, who made this return to the venditioni, and executed a deed accordingly. The alleged defect in this derivation, as vesting the interest of the debtor in the purchaser, is an alleged irregularity in the proceedings under which the sale was made. No returns appear on the record of the testatum, of a levy on the property sold, so as to ground a venditioni exponas on which the sale was made. But the proper time for the debtor, or those who have an interest in him, to have availed themselves of this defect, was before the deed was made by the sheriff, or acknowledged in court. This and the like objections come forward properly at that stage. But even on a'writ of error, supposing this irregularity to be such error as would avoid the sale, a debtor who had not availed himself of it at the proper stage, would not be relieved against the sale, even at common law, where a stranger was the purchaser. Goodyer v. Junce, 1 Yelv. 179, no return made to ground a testatum, yet execution. It shall be presumed there was such writ, and if sale has been made to a stranger, yet upon the reversal the debtor shall not have his term again; for it is the party’s folly he does not pay the judgment, and if such a sale should be avoided no one would buy goods of the sheriff, whereby many executions would fail. The title of plaintiff is also resisted by what is alleged to be a title derived from the debtor Rees, prior to the lien under which the plaintiff derives title, that is, the attaching of the judgment under which the sale was made; in fact be — 50 — fore even the judgment was entered on which the testatum issued, which alone could attach upon the lands in question.. This was by a conveyance from the debtor. The first question which arises mustrespect the nature of this conveyance. If absolute, and'for a valuable consideration, and bonay&h, transferring the property, it takes place of the judgment or testatum fi.fa. under it, for it is prior. But the consideration wag the discharge of the grantor’s debts, except as to the nominal sum of 5s.; and though creditors are the grantees, yet they are in:.fact but trustees for this purpose, and by the special provision of the conveyance, only for such of the creditors, as should sign and agree to certain conditions in a certain instrument, the surplus money to be for the grantor after paying all debts. This must mean the debts of such creditors as should sign and agree as aforesaid; or taking it to mean all debts of all creditors, and the grant to be for this object, yet it is “ reserving to the grantor full power and “ perfect liberty to enterupon occupy andenjoyallor any part “ of the said lots and lands, situated in the county of North- “ umberland, and to take and receive the yearly rents, issues “ and profits thereof for and during the term of 4 years, the “ grantees to be at liberty to sell any of the lands in Northum- “ berland county within the 4 years notwithstanding the “ above reservation.” The land in question was in the county of Northumberland. This grant was good against the grantor, and defeasible only by satisfying the object of the grant. But by so doing* it was as much defeasible as a mortgage. A sale made in pursuance of the trust would be good; but the grantor must be considered as having an equitable right, to supersede all execution of the trust by satisfying the object of it. Where an estate is conveyed to trustees, upon trust to sell and pay debts, &c. and to pay the surplus of the moneys to arise by sale to the grantor, the debt of the judgment creditor can only,it should seem, affect the surplus moneys in the hands of the trastees, and is not a lien on the estate itself. Sugderds Law of Vendors, 305. But no sale here had taken place prior to the levy or sale under the judgment; so that the case of a purchaser under the trustee does not intervene. But this grant though good against the grantor, or judgment creditor to this extent, cannot farther affect creditors who do not choose to accede to the instrument. As to them it is void; for in the — 51 — words of the statute 13 Eliz. c. S. it maybe to the let or hinderance of the due course and execution of law andjustice,' “ and as against such persons whose actions, suits, debts, “ accounts, &c. might be in anywise disturbed, hindered or “ delayed\ it is void, frustrate, and of no effect.” Even with personal notice of this deed therefore, I take it the debt before due and owing, and contracted on the credit of this fund, as must be presumed, could not be affected by this grant, in proceeding to recovery. In this view of the case, it might not be necessary for me to consider the effect of the registry of this conveyance as giving notice of it, the duly registering being questioned on the ground that it had not been proved according to the requisites of the registering act. Nevertheless having an opinion, I may express it, which is, that it would not seem to have been so proved as to warrant the registering in the county of Northumberland; and taking that to be so, I have no hesitation in saying that it could not be notice. This if notice, is constructively so; and the law cannot construe that as having an effect, which is not brought within its requisites. It is on this ground that it cannot give priority; and how then shall it operate as notice, which is the principle on which priority is given. This was my way of thinking at the argument; since which I find in the books a confirmation of my opinion. For though it is thrown out by the chancellor JReidesdale, that if registry be notice, it must be notice whether duly registered or not; Shoales and Lefroy 157; yet we have this dictum adverted to in Sugden’s Law of Vendors 470, with the author’s comment, “ that this is assuming what “ has never been decided; and it should seem that the courts “ might hold without any violation of principle, that a pur- “ chaser should not be deemed to have notice of an equit- “ able incumbrance, by the mere registry of it, unless it was “ duly registered. Why should equity interfere in favour of u an incumbrancer, when he has not complied with the “ salutary requisitions of that very act, upon which he lays “his foundation for relief.” To apply this to the deed in question, it is taking it to be but an equitable conveyance; but the reasoning is the same where the contest, as it is alleged in this case to be, is between a prior and subsequent absolute conveyance. Why should the law interfere in favour — 52 — of a purchaser, to construe notice by a registry which has not ‘been made according to the requisites of the registering act? But we come now to the main strength of the case on behalf of the defendant. The judgment creditor under whom the plaintiff claims, Abraham Weitner, did by his deed recognize the deed of Rees, and also another deed of other creditors recognizing the deed of Rees; and therefore it cannot be in his mouth to say that he is letten, hindered, or delayed in his execution; and the conveyance in question bars any right derived to him under his judgment, thus proceeded upon contrary to his agreement. But who is it that shall set up this bar against him? Thomas Rees the debtor, or those who come in under him by virtue of these trust deeds, so given or acceded to? Shall they be permitted to set this up against a purchaser under Thomas Rees the debtor? Will it not be an answer from a purchaser to say, you suffered this judgment to stand on the record without an entry of satisfaction or stay, and what is more, this deed of Weitner is not recorded duly or unduly. I have had no notice of it, actual or constructive. I have been led to lay out my money7 by this appearance of an existing judgment, and proceeding under it; and whether by the fraud of the judgment creditor, or the want of information on the part of his executors, the negligence of the debtor or his grantees, it ought not to work me an injury. It is contrary to the policy of the law in supporting sheriffs’ sales, which might have been set aside on motion, or reversed by writ of error. In this view of the cast, a purchaser is in a better situation than a judgment creditor himself. For the want of notice will protect him, while the privity of the judgment creditor to the transaction, takes that away. As to a judgment creditor not being a purchaser, strictly speaking, he is not so. His lien approaches him to the character of a mortgagee. One cannot call a judgment creditor a purchaser; all that he has by the judgment is a lien upon the land. 2 Peere Wms. 491. But “ the statute of Elizabeth, “ expressly extends to charges upon the land; for the words “ are ‘ shall or do bargain, &c. or charge the same lands’ and “ charges upon, as well as charges out of the land, seem “ within their natural import. It is true the conusee of a “ statute or recognisance, has, in strict legal language, no — 53 — ■sf charge upon the land; he has neither a right in, nor “ a right to the land; and if he release his right in or to the “ land, he may nevertheless extend it if he choose. But yet “ in common intendment, statutes and recognizances are “ charges upon the land, and they have been so called in “ courts of law; and it would have been too much to circum- “ scribe the operation of a law for the prevention of frauds, “ by insisting on such technical formalities. In Garth v. “ Estfield, it was said, that though the statute did not ex- “ pressly speak of conusees, it should be expounded to “ extend to them, for the statute had always received an “ equitable construction to relieve purchasers.” Roberts on Fraudulent Convey. 392. The purchaser at sheriff’s sale, is a purchaser, and protected under want of notice like every other. The consequences would be monstrous, if the law would suffer him to be disturbed by the collusion and secret trust, or to be affected even by the culpable negligence, of those who' were under a moral and legal obligation to do something, which would save others from laying out their money without consideration. The policy of the law to obviate fraud, is against it. I concur in the argument of counsel on one side in this case, that even had the debt been paid by Rees or by his trustees to the judgment creditor, or had an agreement in writing been made but not filed, or a reléase not put upon record, this would not affect an innocent purchaser under the outstanding judgment. There will be a loss in this case, provided the estate of Rees should prove insolvent; and it comes to this, whether it shall fail upon creditors who have gone out of the ordinary course, by an arrangement with the debtor, however founded in humanity to him and a spirit of equal justice to other creditors, yet who have not conducted the arrangement in such a manner, as to save purchasers from laying out their money on the property which was the subject of the arrangement. This I admit is taking it as established, that the conveyance to the trustees in the first instance, did not absolutely divest the property out of the debtor; or, that the not duly recording it as against other creditors, avoided it. For otherwise whatever might become of the judgment of Weitner, the land conveyed would be out of the reach of the lien of it. And I am aware that the considering these conveyances in this point of view, is in the way of almost any arrangement that a — 54 — debtor possibly can make for a pro rata payment of his debts ' where he is indebted to several, short of a consent of the whole of his creditors, and contrary to the policy of the statutes of bankruptcy in this particular, and of insolvent acts; but I think it better that the arrangement should be left to the positive regulations of statute, or to the ordinary course of law, than that an opening should be given by an arrangement of the debtor’s own, to collusion and fraud. If a debtor wishes to give property in. discharge of what he owes, let him transfer it absolutely, individually according to their debts, or to one for the use of the whole, as the law does in the cases of bankruptcy or insolvency; and not as here for the use of such as shall sign and agree to certain conditions, or to cut and carve for himself as to use and occupation and perception of profits, and bringing suits in his own name or- in that of his trustees. This is inconsistent with a fair and bona jide parting with the property, and in the nature of the disposition, and most generally in the intention of it, is but a cover for fraud, and a reservation of interest for the debtor himself. From all the experience I have had, it takes place in the case of shuffling debtors, who have contracted debts without an honest intention of discharging them, and have put off the payment, with a view to save something in the confusion of appropriation. If a man must fail, let him call his creditors, and leave the disposition to their consent, or where they cannot agree, to the ordinary disposition of the law; it is in vain for him to attempt to continue a sort of ownership; and it is unreasonable, where his situation raises a presumption that his conduct has not-been at least prudent, in the management he has already had of his affairs. I have a strong leaning against every thing of this kind, and think it best that it be left to the law to settle a man’s affairs, when they have become so embarrassed that it must be evident he has not been provident himself, than that we should hear of his taking care of his. creditors by deeds of trust, not having the fair open and general consent of the whole of the creditors. It is better that he should be suffered to prefer individual creditors, than that the least countenance should be given to ways and means of defrauding all. On these grounds, I am of opinion for the plaintiff. Judgment for plaintiff. Footnotes [(a)] 2 Inst. 671. Cro. Jac. 408. Cro. Car. 110. 216. 569. [(a)] 1 Vern. 8. 33.190. 488.1 Wms. 268. [(b)] 3 Wms. 9.1 East, 295.1 H. Bl. 119. [(c)] Pow. on Mort. 34. 50.156, 301.302. [(a)] 1 Scho. & Lef. 468. [(b)] Sugden. 470. [(c)] 3 Cranch 155. [(a)] 8 Co. 96 b. 143 a. 1 Vez. 195, 196. [(b)] Dy. 363 a. Yelv. 180 2 Leon. 92. 5 Co. 90. Jenk. 264. Cro. El. 278. [(c)] Ambler 678. [(d)] 2 Eq. Cas. Abr. 609.pl. 7. [(a)] 1 Vez. 123.