Delaplain v. Wilkinson

HaymoND, Judge, announced the opinion of the Court: — 261 — The appellants have assigned in their petition the following as errors in the decree for which as they insist that it should be reversed, viz : “ 1st. As no deed or contract in writing with J. N. Wilkinson, the judgment debtor for said lot, was admitted to record until after the judgments of plaintiffs in said cause and the judgment of defendant were recorded and docketed, the judgments were a lien on the land. “2d. But if it should be held, that a verbal contract with a judgment-debtor, made before the judgment was rendered, under which the purchaser took possession, and held so as to entitle him to a conveyance of the legal title, would be valid as against subsequent judgments, still the decree complained of was erroneous, as Wilkinson had sold by contract in writing to House in 1869, which contract was not admitted to record, and as he further conveyed the legal title to W. P. Golden, (not G. W.,) by the deed of September 19, 1871, which was not recorded until October, 1874, said G. W. Golden, would not have been protected against said judgments, even if he had had a written contract with W. P. Golden or E. B. House, duly recorded, before the 5th day of June, 1874, or the 18th of August, 1874. And that as such a written contract duly recorded would not have protected him, a verbal contract can not have a greater effect.” So much of the errors so assigned as it is deemed proper and necessary to consider and decide in this case I will now proceed to consider and determine. The statute 1st Revised. Code of Va., ch. 99, § 4, of 1819, p. 362, says: “All bargains, sales and other conveyances whatsoever of lands, tenements or heredita-ments, whether they be made for passing any estate of freehold or inheritance, or for a term of years, and all deeds of settlement upon marriage, wheréin either lands, slaves, money or other personal thing, shall be settled or covenanted to be left or paid at the death of the party or otherwise; and all deeds of trust and mortgages whatsoever, which shall hereaftér be made and executed, shall be void as to all creditors, and subsequent purchasers for — 262 — valuable consideration without notice, unless they shall be acknowledged and proved and lodged with the clerk be recorded according to the directions of this act; but the same, as between the parties and their heirs, and as to all subsequent purchasers with notice thereof or without valuable consideration, shall nevertheless be valid and binding.” And the 12th section of said chapter declares that every conveyance in this act mentioned except deeds of trust and mortgages, which shall be ac-knowleged, proved or certified according to law, and delivered to the clerk of the proper court, to be recorded, within eight months after the sealing and delivery thereof, shall take effect and be valid, as to all persons, from the time of such sealing and delivery,” &c. Under this statute the case of McClure v. Thistle’s ex’rs, 2 Gratt. 183, was decided. In this case it was held, that “ a deed, executed before judgments have been obtained against the grantor, under which the purchaser has been put in possession and paid the purchase-money, but which was not recorded until after the judgments were obtained, is void as against such creditor, and the land conveyed thereby is subject to satisfy the judgment.” In this case the opinion of the Court of Appeals is not published. In the case of Withers v. Carter et al., 4 Gratt. 407, brought and decided under the same statute, it was held, that a deed, which was lost after it was executed, and before it was recorded, is void against creditors of the grantors, and cannot be set up against them in a suit by the grantee brought more than eight months after its execution ; that although the statute avoids an unrecorded deed as against creditors of the grantor, it does not affect a pre-existing equitable estate of the grantee acquired by purchase from the grautor, and in this case in the opinion of the court, a distinction is drawn and laid down between it and the case of McClure v. Thistle’s ex’rs., ubi supra. Iu the said case of Withers v. Carter et al., aforesaid, it seems, that on the 27tli day of February, 1834; — 263 — William H. Triplett, by a contract under seal, sold to Jonathan Carter a tract of land in the county of Loudon, containing about' one hundred and sixty-six acres, $18.00 dollars per acre ; and put him in possession thereof. The terms of the sale, were that Carter should pay $600.00 on the 1st of June following, when Trip-lett was to convey the land by deed with general warranty; $600.00 was to be paid on the 1st of January, 1835, and the balance amounting to $1,791.26, on the 1st of January, 1837; the deferred payments to be secured by a deed of trust on the land. The two first payments were made by Carter, and on the 15th of January, 1835, he executed his bond for the last. On the 25th of January Triplett and wife executed a deed to Carter for the land, and acknowledged it before two justices, who duly certified the acknowledgement of the husband and the privy examination of the wife. This deed was committed to a son of Jonathan Carter to be delivered to the clerk of the county court of London county for record, and was by him lost, and was never found. On the 27th of January Carter executed the deed of trust as required by his contract, and that was duly recorded. On the 4th of March, 1835, Triplett assigned Carter’s bond for $1,791.26 to, John and James Withers to be applied in part to the satisfaction of an execution, which they then had against him. This execution had been awarded on a forfeited forthcoming bond, which was defective for want of security, but had not been quashed, and the bond had been taken on an execution issued upon a judgment recovered by them against Trip-lett in 1833. The award of execution was on the 27th day of January, 1835, at a special term of the circuit court of Frederick county, which commenced on the 26th of the same month; and the bond had not been previously lodged with the clerk. At the special term of the circuit court of Frederick county, a decree was made against William C. Triplett and Grubb’s administrator as sureties of Lane, executor of Haney, in favor — 264 — Isaac R. Ellzra and others, legatees of Raney for $1>288.34 with interest and costs. There had been a def°r an account in this case in 1833; and at the commencement of the term the suit was on the deferred docket. The commissioner filed his report on the 29th of January, 1835, and the cause was set for hearing by consent on the 7th of February following, on which day the decree aforesaid was rendered. In this case Judge Baldwin in delivering the opinion of the court at pages 410 and 411 says : “ The deed from Triplett to Carter not having been delivered to the clerk to be recorded is void as against the creditors of Trip-lett, and cannot be set up against them in this suit, brought more than eight months after the execution of the deed, though proved to have been accidentally lost in the attempt to transmit it to the clerk’s office. Whether equity would have set up the deed, in a suit brought against the creditor within the eight months, is a question that does not arise in this case. But though the statute avoids the deed as against the creditors of the grantor, it does not affect the pre-existing equitable estate of Carter, acquired by purchase from him. The judgment and decree in question were obtained at the January term, 1835; and Carter was then the owner of the land. He bought it, as appears from the articles of agreement, in February, 1834, received the possession, and had paid up a considerable part of the purchase-money. Nothing was wanting but a valid conveyance of the legal title, and that he would have had but for the intervention of the statute, a perfect deed having been made to him before the commencement of the term, which however by reason of its accidental loss was not delivered to the clerk for recordation. If no deed had been made at all, it is clear that Carter’s title would have been good in equity, though not at law, against creditors of Triplett by judgments subsequently recovered. The effect of the statute was to render the deed quoad the creditors of the grantor a mere nullity, and so to leave the — 265 — subject precisely in the same situation as if no deed had been made or attempted.” The judge, after citing Sug. Vend., Am. ed. of 1836, from 9th Lond. ed. 613; Burgh v. Francis, 1 P. Wms. 279; Taylor v. Wheeler, 2 Vern. 564; Finch v. Earl of Winchelsea, 1 P. Wms. 282, at page 412, says: “The foregoing authorities, if any be requisite, are more than sufficient to show that a good equitable title, acquired by a purchaser, is paramount in equity to subsequent judgments of the vendor’s creditors recovered before the ven-dee has obtained a conveyance of the legal title, or though he has obtained one that is void in law. If this were not so, then a purchaser would not be safe in relying upon an executory contract, but would be obliged to obtain a conveyance of the legal title at the moment of Ill's purchase,” &c. Again the judge, at page 413, says : “ It is the deed of conveyance, therefore, and that only, which the law avoids for want of recordation, and the executory contract is left untouched by the statute in the slightest degree. No deed of conveyance is necessary to confirm its validity, and how an abortive attempt to obtain a valid conveyance can destroy the pre-existing equitable title is beyond mv comprehension; nor can I conceive what merger there can be, in regard to creditors, of the equitable title in the legal title by force of a deed, which, as to conditions, is a blank piece of paper.” Again at page 416 the judge says: “I learn it is supposed by some, that the decision of this court in McClure v. Thistle’s ex’rs, 2 Gratt. 182, gives countenance to the idea, that though a purchaser has by an executory contract acquired a good equitable title to land, which, until he receives a conveyance of the legal title from the vendor, is exempt in equity from intervening judgments against the latter, yet that such equitable title will avail him nothing, after he has obtained such conveyance, against judgments subsequently received, unless the deed has been duly recorded. But it was not the — 266 — intention to decide any such proposition, though the reported case without close examination maybe liable to miscontruotion, from the reporter’s attention not having been drawn by the court to the reason of the general affirmance of the chancellor’s decree. The case was one, in which there was no evidence of an executory contract or possession prior to the deed, nor was any asserted by the defendant’s answer ; he relied simply upon his deed, his possession under it, and his payment of the purchase-money,” &c. This case was decided by the Court of Appeals of Virginia in 1848. At the revisal of the Code of Virginia in 1849 an amendment was incorporated into the statute. The statute as amended is contained in sections 4 and 5 chapter 118 of the Code of 1849, which took effect on the 1st day of July, 1850 and is as follows: “ 4. Any contract in writing made in respect to real estate, or goods and chattels, in consideration of marriage, or made for the conveyance or sale of real estate, or a term therein of more than five years, shall from the time it is duly admitted to record, be as against creditors and purchasers as valid as if the contract was a deed conveying the estate or interest embraced in the contract. “5. Every such contract, every deed conveying any such estate or term, and every deed of gift, or deed of trust or mortgage, conveying real estate or goods and chattels, shall be void as to creditors and subsequent purchasers for valuable consideration without notice, until and except from the time it is duly admitted to record in the county or corporation wherein the property embraced in such contract or deed may be.” These sections were in force in Virginia without alteration or amendment, from the time they took effect until this State was admitted into the Union in 1863, and continued in force in this State thereafter without alteration or amendment, until the Code of'this State of 1868 took effect on the 1st day of April, 1869. See Code of Virginia of 1860, sections 4 and 5 of chapte — 267 — 118. And the same sections were carried into the Code of this State of 1868 without amendment and constitute sections 4 and 5 of chapter 74 thereof. The amendment of the statute, so as to include contracts in writing for the conveyance or sale of real estate for a term greater than five years, may have been induced by the decision of the Court of Appeals in the case of Withers v. Carter et al., 4 Gratt. 407; and the effect of the amendment was to place such written contracts unrecorded upon the same footing as to creditors and purchasers for valuable consideration without notice, as unrecorded deeds. This being so, then every unrecorded or unregistered contract in writing for the conveyance or sale of real estate for a greater term than five years, since the first day of July, 1850, is void as to creditors and purchasers for valuable consideration, the same as an unrecorded or unregistered deed conveying such real estate or term is or would be under the statute, and as it was before the amendment. It seems that it has long been an established rule of courts of equity, that, apart from any positive provision of a statute to the contrary, where one has an equitable interest in land with a good right to call for the conveyance of the legal title, and a subsequent encumbrancer (c. g. a judgment-creditor,) whose debt did not originally affect the lands, acquires the legal title,' he shall notwithstanding be postponed to the equitable claimant. For since the subsequent encumbrancer did not originally take the land for his security, nor had in his view an intention to affect it, when afterwards the land is affected by his lien, and he comes in claiming under the very person who is obliged in conscience to make the assurance good, he stands in that person’s place and is postponed, despite his legal title, to the superior equity of the adverse claimant. 2 Lom. Dig. 487; Burgh v. Francis, 1 P. Wms. 279; Withers v. Carter, 4 Gratt. 411; Coleman v. Cocke, 6 Rand. 618; 2 Min. Inst. 873, 874. It must be observed, however, that this equitable — 268 — ground of priority and relief is not admitted, against ^e positive provisions of a statute. “ Of this the case of McLure v. Thistle’s ex’rs, 2 Gratt. 182, affords an illustration. On the .23d of December, 1835, David Agnew conveyed a lot in the city of Wheeling to John McLure, and put him in possession, but the conveyance was not recorded until May, 2Lst, 1842. Subsequent to the conveyance, but before its registry, Benjamin Thistle obtained a judgment against Agnew, upon which the latter took the insolvent debtor’s, oath in August, 1840, and in 1843 Thistle filed his bill to subject the lot in McLure’s possession to his judgment, upon the ground (as is explained in Withers v. Carter, 4 Gratt. 416,) that Mc-Lure appeared to have had no previous equitable title which did not require to be registered, but from the first had owned nothing but the legal title created by Agnew’s conveyance, which in consequence of not being recorded the statute peremptorily declared to be void as to creditors, of whom Thistle was one, Since 1st of July, 1850, (when the revisal of 1849 took effect) a similar doctrine would have prevailed in Withers v. Carter, and such like cases; for since that period contracts in writing for the sale of lands, or a term therein of more than five years, are like conveyances declared to be void as to creditors and subsequent purchasers for valuable consideration without notice, until and except from the time that they were duly admitted to record.” 2 Min. Inst. 875. Now in the case at bar it appears that on December 23, 1868,-the said J. N. Wilkinson by contract sold a part of the lot of land in question to E. B. House, and at that time the contract was committed to writing and signed by Wilkinson and delivered to the defendant, House, and House was put in possession of the property purchased; and that afterwards on the 2d of April, 1869, the said Wilkinson by contract sold the residue of said lot to said House, and at that time the last named contract was committed to writing and signed by Wilkinson — 269 — and delivered to said House, and House was put in possession oí the land last so purchased by him. It further appears that House, very soon after he was so put in possession of said lot, made valuable and permanent improvements thereon, and that sometime previous to the date of the judgments in the bills mentioned the said House paid and caused to be paid to said Wilkinson the full amount of said purchase-money. It also appears that House continued and remained in pos--session of said lot until sometime in 1871, when by verbal contract only he sold the whole of said lot to W. P. Golden, who immediately was put in possession of the same and continued in the possession of the same until sometime in August, 1872, when he by verbal contract only sold the same to his brother, George W. Golden, and the said George W. Golden was then and there put into the possession of said lot under said verbal contract and remained and continued in such possession until the commencement of this suit, except that portion thereof perhaps of which Howard Haley was in possession under a contract of purchase from said George W. Golden. It also appears that the said George W. Golden made valuable and permanent improvements upon the said lot after his said purchase, and that said Haley also made valuable aud permanent improvements on the part he so purchased before the rendition of the judgments in the bill mentioned. And it also appears that said House received his purchase-money from the Goldens prior to the date of said judgments, as well also as the said W.P. Golden. It also appears that in September, 1871, about the time House made the verbal contract of sale to W. P. Golden, he directed the said Wilkinson to make the deed for said lot to said W. P. Golden; that the said Wilkinson did accordingly on the 19th day- of September, 187J, make and deliver to the said W. P. Golden a deed for said land duly acknowledged for record, to which the wife of said Wilkinson was a party; that some — 270 — time after the said deed was so made and delivered, the sa^ W. P. Golden took the deed to said Wilkinson, and wished to know if Wilkinson could not change the deed to George W. Golden, as he had sold the lot to the said George W. Golden ; and said Wilkinson then inserted in the deed the name of George W. Golden in the place of said W. P. Golden; that some misunderstanding was gotten up between said W. P. Golden and George W. Golden, and the said W. P. Golden notified said Wilkinson'to hold the deed until the difference between them was settled; and accordingly said Wilkinson did hold the same until the 10th day of October, in the year 1874, and then gave it to said George W. Golden, and he on the same day had it recorded in the clerk’s office of Harrison county. But before the delivery and recordation of said deed the judgments in the bill mentioned were recorded and docketed as required by law. Said judgments however were each obtained and docketed after the said Wilkinson had so delivered the said deed to said W. P. Golden, and after the said W. P. Golden had sold the said lot to said George W. Golden. The said contracts in writing of the sale of said lot by Wilkinson to House were never recorded, and the said deed made by said Wilkinson to said W. P. Golden was never recorded. I apprehend there can be no doubt but that the said contracts in writing of sale of said lot made by said Wilkinson'to said House in 1868 and 1869 are void as to the judgments in the bill mentioned, (Nagle v. Anderson, 11 W. Va. 98); and if House had never sold to W. P. Golden and he to George W. Golden, I apprehend under the circumstances appearing, that it never would have been even claimed by House, that said contracts in writing and his purchase were not void as to the judgment-creditors in the bill mentioned. Does the verbal sale from House to W. P. Golden and possession by him and sale to George W. Golden and possession by him under all the circumstances change the effect of the statute upon — 271 — the ease ? or in other words, do they take the case out of the influence of the statute ? Under the opinion of Judge Green in Coleman v. Cooke, 6 Rand. 642 and 643, tne making of the deed by Wilkinson to W. P. Golden did not transfer the equitable interest of House to W. P. Golden, but the previous direction of said House to Wilkinson to make the said deed did have that effect. Suppose then that W. P. Golden did by said direction under the circumstances acquire House’s equity to a deed for said lot from Wilkinson, then W. P. Golden’s equity is void as to said judgment-creditors, because the written contract for the sale of the lot, out of which his equity springs, are void as to said judgment-creditors. If W. P. Golden had had the deed made to him by Wilkinson recorded before the rendition of the judgment, of course it would under the circumstances have been valid under the statute as against said judgments. In that case the judgment-creditors of course would have no claim under the statute. But, as we have seen, W. P. Golden failed to have his deed recorded, and, so far as that deed is concerned, the case as to him stands j ust as though the deed never was made, and he has no equity to fall back upon except the equity he derived from the said House by his, House’s, direction to Wilkinson and his, W. P. Golden’s, verbal contract with House ; and that equity is void under the statute as to said creditors. In the case of Graysons v. Richards, and Grayson v. Beaty, 10 Leigh 57, the syllabus is as follows: “A father by deed of gift conveys land to a son, and shortly after the son voluntarily surrenders the deed to the father to be cancelled, with design to divest the title out of himself and restore it to the father, and the deed is cancelled. Held, the son’s title is not divested by the cancellation of the deed, and the land shall be charged in equity with the debts of the son. In such a case, a creditor having obtained a judgment against the son subsequent to the cancellation of the deed, under which the son has — 272 — taken tlie oath of insolvency, is not only entitled to satisfaction of his judgment out of the land-as still the property of the son, but he may also claim satisfaction out of it of a simple contract-debt which the son owes ; and other creditors of the son who have not recovered judgments against him, coming in at the same time, shall be entertained to claim satisfaction of the debts due them out of the same land.” It would seem from the principles decided in this case, that the legal title passed by the deed from Wilkinson to W. P. Golden, and that the said W. P. Golden has never in fact divested himself of the legal title, and that it is yet in him. but of course subject to the judgment-debts in the bill mentioned, as that deed was never recorded. And according to said decision in 10 Leigh the said deed from Wilkinson to George W. Golden did not pass the legal title to said George W., for-the reason that it had already passed out of said Wilkinson to said W. P. Golden; and perhaps, as the deed as made acknowledged and delivered to W. P. Golden was changed by the erasure of the name of W. P. Golden and the insertion of the name of George W. Golden in lieu of the the name of W. P. Golden, the deed as thus changed as to the grantee therein could not have been lawfully admitted to record without re-acknowledgment of the deed after the said material change was made. But the deed was not admitted to record until after the judgments in the bill mentioned against said Wilkinson were rendered and docketed according to law, and it is therefore unnecessary to decide whether the said deed from Wilkinson to said George W. Golden was improperly admitted to record or not. The deed from said Wilkinson to W. P. Golden being void as to the said judgment-creditors, because not recorded, and the equitable claim of said W. P. Golden ■for said property being void under the statute as to said judgment-creditors, and the said George W. Golden having only an equitable claim against the said W, P, Gol — 273 — den for the said property springing out of and based upon his said verbal contract of purchase made with said W. P. Golden, or at most an equitable claim to said property based upon the said equitable claim of said W. P. Golden, which was the equitable claim of said House to the same, and which, as we have seen, is void as to said judgment-creditor the equitable claim of said George W. Golden to said lot must also be void as to said judgment-creditors, for the same reason that the equitable claim thereto of said W. P. Golden is void as to said judgment-creditors. Neither of the said Goldens ever purchased the lot in question from said Wilkinson ; and the only equity they or either of them- have to said lot is based and founded upon the equitable claim of said House, which is, as we have seen, void as to the said judgment-creditors under the statute; and therefore the said equitable claims of said Golden’s and each of them upon said lot, which they or either of them derived from or through the said House, and which the said George W. Golden derived from said House through thé said W. P. Golden, is void as to the said creditors. This case does not in my opinion come within the influence of the case of Floyd, trustee, v. Harding et als., 28 Gratt. 401. That case will be considered by this, court when a case, to which it is properly applicable arises before us. When the vendee has a deed or other written evidence ot his purchase, there is no hardship in requiring him to place it upon record; and it may be said that it is gross laches not to do so. Now if in this case the said contracts'in writing made by Wilkinson with House, or the deed made by Wilkinson to said W. P. Golden,- had either been recorded prior to the time of the rendition of these judgments, then the said judgments would not have constituted liens upon the said lot. And it was certainly gross negligence to omit to have them recorded, .and if it should be necessary .to enforce the said judgments or either of them-to any extent against said lot, — 274 — it will be because of the said laches and gross neglect aforesaid. It is immaterial whether the creditor had notice of the unrecorded writing or not,, when the debt was contracted. The statute declares it void as to all creditors without discriminating, as it does in the clause touching purchasers in respect to notice. Guerrant v. Anderson, 4 Rand. 211; 2 Min. Inst. 866 and 872. If the contract of purchase of said House with Wilkinson, the owner, had been a verbal instead of a written contract then the case would have presented a very different question from that which the case now presents. Syllabus 2. Syllabus 1. For the foregoing reasons I am of opinion, that so much of the said decree of the circuit court of said county of Harrison as dismissed the plaintiffs’ bill as to the defendant, George W. Golden, for the reason as stated by the last named court, that that court was of opinion, that the house and lot owned by said Golden and in controversy in the cause is not subject to the lien of the judgment of Hurst, Purnell & Co. against defendant, Wilkinson, orto the lien of the judgment in favor of the plaintiffs, and also so much of said decree as decrees that the defendant, Golden, recover against 'the plaintiff his costs in the suit expended, are erroneous and should be reversed. It appears from the evidence that Howard Haley is in possession of a part of said lot under and by virtue of some contract of purchase from said George W. Golden, and it does not appear that he was made a party to the cause. From what appears by the evidence I think he should be made a party. to the cause after the case goes back to the circuit court for further proceedings, though the said decree would not have been reversed by this Court because he was .not a party to said decree, as the decree, if otherwise correct, would not have been to his prejudice, and the failure to make him a party could not have worked injury to any person. So much of said decree, as dismissed the plaintiff’s bill as to the defendant, George W. Golden, for the reason — 275 — and opinion of the court stated in the said decree, and as decrees that the defendant, Golden, recover against the plaintiffs his costs in the suit expended, must for the reasons aforesaid be reversed, set aside and annulled, and the appellees, William P. Golden and George W. Golden must pay to¡the appellants their costs in this Court expended about the prosecution of their appeal. And this Court proceeding to render such decree in the cause, as the said circuit court should have rendered, it is adjudged, ordered and decreed, that this cause be remanded to the circuit court of the county of Harrison with instructions to said court to allow and permit the plaintiffs to file an amended bill making Howard Haley a party defendant to the cause and also such other persons as may be or become proper, and for such other and further proeeediugs therein to be had as are in accordance with the principles and rules which govern courts of equity. The Other Judges Concurred. Judgment Reversed. Cause Remanded.