Sumner v. Rhodes

Waite, J. The question arising upon these facts in the case, and upon which our opinion is asked, is, what are the equitable rights of the plaintiff against the other defendants. It is very evident, that if each member of the company had given to Smith a separate note for his part of the debt due to him, and secured the payment by a separate mortgage of his interest in the lands, Cunningham might have paid his own debt, purchased of Smith the other mortgages, and sustained a bill for a foreclosure against each mortgagor. And had they all united in a joint note and mortgage, their equitable rights, as among themselves, would remain the same. It would have been the duty of each one to pay his portion of the debt; and his interest in the lands would in equity be considered as pledged for the payment of his share. Smith indeed might have sued all, and collected his debt of either, and might have retained his lien upon all the lands mortgaged until his whole debt was paid. And had he compelled Cunningham to pay the whole debt, Cunningham would in equity have been entitled to the benefit of the mortgage given by the other members of the company, for the security of their respective shares. So, if he has purchased of Smith the mortgage, and taken an assignment to himself, that part of the debt which it belonged to him to pay, must be considered as paid, and as to the balance, he may be considered in equity as the assignee of Smith, and become entitled to hold the respective shares of the other mortgagors until their portions of the debt are paid. And we see no difficulty in his sustaining a bill for a foreclosure against them, or their assignees of the equity of redemption. The plaintiff in the present case stands in the same situation as Cunningham did, and is entitled to the same relief that he would have been entitled to, had no assignment been made by him. But the mortgage deed in this case has not been duly executed, by all those persons who had agreed to do it. Now, it is perfectly well settled, by repeated decisions, that if Smith had sold his lands to the members of the company, upon their agreement to give him a note and mortgage deed of the same land, duly executed bv them, and they had given him a deed imperfectly executed, he might resort to a court of chancery and have his title perfected. Carter v. Champion & al. 8 [139] Conn. Rep. 549. Watson & al. v. Wells, 5 Conn. Rep. 468. Smith v. Chapman, 4 Conn. Rep. 344. And he is entitled to this relief, not only against the members of the company who make the agreement, but against all subsequent purchasers having actual knowledge of his equitable title. They take the lands subject not only to all legal incumbrances upon them, but to all equitable incum-brances of which they have notice. The committee in this case has found, that two of the defendants had no notice of Smith’s equitable title, unless the record is constructive notice to them. Our law makes the record of a valid deed constructive notice of the state of the title created by that deed, but not actual notice. In a recent case, this court held that the recording of a deed, defective in consequence of having but one legal witness, was not constructive notice of such instrument. Carter v. Champion & al. 8 Conn. Rep. 549. If, therefore, each member of this company had given Smith a separate mortgage deed of his interest in the lands to secure the note, and a part of these deeds had been duly executed, and the others but imperfectly, so as to pass no legal title, the record of the former would be constructive notice to subsequent purchasers ; but, upon the authority of the case just cited, the record of the others would not have that effect. In our opinion, the same effect is produced, by the parties uniting in the same deed. So far as the deed is valid, the record operates as affording notice, but has no effect beyond that. If indeed it had appeared, that the two defendants had actual notice of the contents of the deed, as recorded, the case would be different. Whether a purchaser has, or has not, actual notice of the contents of a prior deed properly executed and duly recorded, the effect is the same. The policy of our law makes the record sufficient notice. But the case is otherwise when the deed is defective. Before his legal title can be postponed to a prior equitable title, it must appear that he had actual notice of such equity. Our opinion, therefore, is, that the purchase of the mortgage by Cunningham operates as payment only of his share of the debt, being one eighth part; and that for "the balance the plaintiff is entitled to a foreclosure: that she is entitled to [140] have Smith’s equitable title perfected as against all the defendants, who had actual notice of it, at the time of taking their respective conveyances; but that the record of his deed is not constructive notice of the mere equitable title. In this opinion the other Judges concurred. Decree for plaintiff.