Wenz v. Pastene

Braley, J. The term of the plaintiff’s leasehold was for more than seven years, and the lease, not having been recorded, [362] was valid only as against the lessor or his heirs and devisees, and persons having actual notice of it. R. L. c. 127, § 4. If the history of the statute is examined, the provision that actual notice must he shown, or a subsequent purchaser is not affected by an unrecorded instrument, first appears in the Rev. Sts. c. 59, § 28. But under the provisions of St. 1783,- c. 37, § 4, providing that, although effective against the grantee and his heirs, a prior deed unless recorded, should not defeat a subsequent conveyance, the second purchaser could not hold the land, if he had express notice of the prior title before the purchase was consummated by delivery of the deed. Adams v. Cuddy, 13 Pick. 460. To permit him to do so, said Chief Justice Parsons in Farnsworth v. Childs, 4 Mass. 637, 639, “ would be to convert the statute into an engine of fraud, instead of a protection against it.” The additional words, “ and persons having actual notice thereof ” incorporated in the Rev. Sts. c. 59, § 28, did not change the law, but merely put in statutory form what already had been declared by judicial exposition. Lawrence v. Stratton, 6 Cush. 163, 166. Morse v. Curtis, 140 Mass. 112, 113. The lessor mortgaged the reversion, and, although the mortgage omits any reference to it, the judge found, that the mortgagees at the date of the execution of the mortgage, and the defendant before delivery of the deed at the foreclosure sale, under which he asserts a paramount title to the premises, had actual notice of the existence of the plaintiff’s lease. But being the highest bidder, and having entered into a contract to take the property, and having made a partial payment of the purchase price before he was notified, the defendant contends, that he acquired an inchoate right, which was perfected by the delivery and acceptance of the deed under the power of sale. If following the sale, and before receiving notice, the remainder of the price had been paid and the deed delivered, the defendant would have been a purchaser in good faith for a valuable consideration, but where notice is received before the purchase price has been actually paid, the completion of the purchase is held by the great weight of authority to be a fraud upon the prior holder of the title under an unrecorded deed or other instrument. Osborn v. Carr, 12 Conn. 195, 201. Grimstone v. Carter, 3 Paige, 421, 437. Peabody v. Fen363 ton, 3 Barb. Ch. 451, 464. Nantz v. McPherson, 7 T. B. Mon. 597. Goldsborough v. Turner, 67 N. C. 403. Weaver v. Barden, 49 N. Y. 286, 292. Sargent v. Eureka Spund Apparatus Co. 46 Hun, 19. Haughwout v. Murphy, 7 C. E. Green, 531. Dean v. Anderson, 7 Stew. 496. Patten v. Moore, 32 N. H. 382. Blanchard v. Tyler, 12 Mich. 339. Dugan v. Vattier, 3 Blackf. 245. Wells v. Morrow, 38 Ala. 125. Hoover v. Donally, 3 Hen. & M. 316. Webb v. Bailey, 41 W. Va. 463. Everts v. Agnes, 4 Wis. 343, 356. Boone v. Chilles, 9 Pet. 187. Wormley v. Wormley, 8 Wheat. 421. Townsend v. Little, 109 U. S. 504, 511, 512. LeNeve v. LeNeve, 3 Atk. 646, 654. Willoughby v. Willoughby, 1 T. R. 763, 767. See Pom. Eq. Jur. (3d ed.) § 755, and cases cited in note 2. It is the setting up of the second conveyance, and not the bargain to buy, which operates to defeat the plaintiff’s tenancy, and under the statute, it is actual notice before the purchaser acquires title, which deprives him of its protection. White v. Foster, 102 Mass. 375. Lamb v. Pierce, 113 Mass. 72, 74. Adams v. Cuddy, 13 Pick. 460. Flynt v. Arnold, 2 Met. 619, 623. Sibley v. Leffingwell, 8 Allen, 584, 586, 587. If by the contract of sale, and the advancement of part of the consideration, the defendant may have acquired an equitable interest, it had not been clothed with the legal title, and after notice he ceased to be an innocent purchaser, and could not destroy the plaintiff’s prior estate by getting a conveyance in fee. Sibley v. Leffingwell, 8 Allen, 584, 586, 587. Lancaster National Bank v. Taylor, 100 Mass. 18. Suffolk Savings Bank v. Boston, 149 Mass. 364, 367. Grimstone v. Carter, 3 Paige, 421. Goshen National Bank v. Bingham, 118 N. Y. 349. Vattier v. Hinde, 7 Pet. 252. Phillips v. Phillips, 4 DeG., F. & J. 208. But as he who asks equity should do equity, the defendant urges that he should be reimbursed or protected to the extent of' the partial payment before relief is decreed. Illustrations where the principle invoked would be applicable readily occur. If, for instance, the purchaser before notice, and by agreement with the Vendor, discharged a mortgage or lien on the property in part payment, generally he should be allowed the amount disbursed, as the enhanced value of the estate enures to the benefit of the holder of the prior title. We do not find in the present case analogous conditions. The property to be sold was the mortgagor’s title [364] as it stood at the date of the mortgage, and included the whole estate, and not merely the equity of redemption. Ewer v. Hobbs, 5 Met. 1, 3. Hall v. Bliss, 118 Mass. 554, 559. Skilton v. Roberts, 129 Mass. 306. Callaghan v. O'Brien, 136 Mass. 378, 383. The defendant, even if he acted as the agent of an undisclosed principal, is the record owner of the fee, and the bill is not brought to compel him to surrender the property. By the terms of sale it was expressly provided, that if the defendant discovered a material defect he could give written notice of it to the mortgagees, who if they preferred, might perfect the title, but if they did not they were obligated to return the payment. A title which appeared to the defendant to be perfect when the property was struck off had become defective, and he could have rescinded the contract, and maintained an action to recover back the instalment he had paid if the vendors refused to return it. Callaghan v. O'Brien, 136 Mass. 378, 383. Burk v. Schreiber, 183 Mass. 35, 36. Or if he had declined to complete the purchase, they could not have compelled specific performance. Jeffries v. Jeffries, 117 Mass. 184, 187. The plaintiff is not found to have been negligent in the assertion of his claim, and the right to rescind, which offered an ample opportunity to avoid being obliged to take an incumbered title, could be exercised only by the defendant. It may be, that as the lease would expire in 'something less than three years, while the rent reserved would be payable to the owner of the reversion, the value of the property with the accruing rent, would be a fair equivalent for the entire purchase price. But whatever may have been the reason, the defendant with knowledge of the incumbrance, by which, of course, his principal was bound, apparently did not desire either to receive back the money, or to obtain a clear title, and affirmed the contract. If for his principal’s benefit, whom he is not shown to have consulted, or in the exercise of his own judgment as to the proper course to be taken, the defendant voluntarily went forward, and obtained the conveyance, he does not present a superior equity which entitles him to priority. Grimstone v. Carter, 3 Paige, 421, 437. Balfour v. Hopkins, 93 Fed. Rep. 564, 570. We are of opinion, that not only is the defendant’s title subordinate to the unexpired term, but under the circumstances the [365] plaintiff should not be required to refund the payment as a condition precedent to relief. The decree must be modified by the omission of this requirement, but in all other respects it is affirmed. Ordered accordingly.