Foster, Neville & Co. v. Stallworth

BRICKELL, C. J.- The single question to which the argument of counsel has been directed, is whether the appellants, Foster, Neville & Co., had at the time of the execution of the mortgage by Greene to them, notice of the prior mortgage to the appellees. It is not denied that they had notice that Greene derived his title from the appellees. It is also an undisputed fact that they knew he had not fully paid the purchase money; for so much of the debt secured by the mortgage to them, as was contracted cotemporaneous with the execution of the mortgage, was for money loaned him to remove the lien or encumbrance of the purchase money. This fact was sufficient to put them upon inquiry, and inquiry would have led them to knowledge of the existence of the mortgage to the appellees. The general rule laid down in the books is, that whatever is sufficient to put a party upon inquiry is good notice; that is, where he has sufficient information to lead him to a fact he shall be deemed conversant of it. — 2 Lead. Eq. Cases, 100; McDougald v. Scroggins, 8 Ala. 382. Knowledge that the purchase money of the lands was partly unpaid — that the recital of its payment in the conveyance was not to be relied on as evidence of the fact, ought to have excited the vigilance and inquiry of those dealing with the vendee. They would know the law gave the vendor a lien for so much of the purchase money as was unpaid, unless some other security for its payment had been accepted. Inquiry would lead to knowledge of the extent of the lien if it had not been waived, or to knowledge of any security the vendor had taken in place of the lien. If Foster, Neville & Co., instead of inquiring, chose to rely on the statements of the mortgagor, as to the amount of the purchase money unpaid, and on his good faith in applying the money loaned to its extinguishment, they must take the consequences of their misplaced confidence. The equity and the legal right of the appellees is older than that which they assert. Priority can be accorded to them on no other ground than a want of notice of the older equity and right, If they had not actual [550] notice, they had constructive notice — knowledge of the facts which compelled them to inquire ; and inquiry would have led to actual notice. Without considering the evidence tending to prove actual notice, which is in some respects conflicting, we rest our decision on the undisputed fact that they knew the purchase money was partly unpaid, which was enough to put them on inquiry, and operate as notice. Affirmed,