Hess v. Dille

Snydee, Judge: George C. Shafer by his trust-deed of November 2, 1873, specificially charged the said forty-five acres of land as security for the debt of one thousand and eighty dollars due from him to William Chesney, and by the subsequent conveyance of the land to Martin V. C. Brookover, the said Martin V. C. was by the terms of the deed to him made liable for one thousand dollars, the unpaid part of said debt and a vendor’s lien expressly retained to pay the said one thousand dollars. By this stipulation in the deed the said Martin V. 0. became primarily responsible to Chesney for said debt and the land in his hands was specifically and expressly charged with its payment. The debt was in fact, as between Shafer and said Martin Y. C. the debt of the latter with the former merely as security for him to Chesney. The debt being thus due from the said Martin Y. C. and its payment charged upon his land, he then entered into an an-augement with Mary E. Brookover to sell her said land and as a part of this arrangement the said MaryE. was to satisfy or assume the payment of said one thousand dollars to Chesney and have a credit for the same on the purchase-money agreed to be paid by her to said Martin Y. 0. for said lai)d. In pursuance of this ar-rangment, on February 1, 1875, she executed to Chesney her note for one thousand dollars and he surrendered to her said Shafer note. If the said Mary E. had not actually purchased said forty-five acres of land at the time she gave Chesney her note, the agreement for the purchase had then been made and the giving of said note and obtaining from Chesney the Shafer note was a part of the agreement made to effect said — 95 — purchase. The facts and circumstances disclosed by the record leave no doubt on my mind that the intent and purpose of all the parties, the said Martin Y. C., Mary E. and Chesney, were that the said Mary E. should become the purchaser of said land and as a part of the consideration of said purchase she was to assume the payment of said debt to Chesney which was a lien on the land and release the said Martin Y. C. from liability on account of said debt. That the said Mary E. was to make said debt her own; and that it was with this intent an d purpose that she substituted her note for the said Shafer note. This seems to be conceded by the counsel for the appellee, John A. Dille, for he says in his brief, “ doubtless when Mrs. Brookover gave her own note for the Shafer note it was in contemplation of the purchase of said land, and it is more than likely that the contract and arrangement with said Martin Y. 0. was made between the 1st February, 1875, when she got the Shafer note of Chesney and the date of the deed.” I do not think there is any room for controversy as to this fact. The giving of her note to Chesney for the' Shafer note and the purchase of the land by Mrs. Brookover were parts of one and the same transaction. The completion of one act depended on the accomplisment of the other. If, therefore, the giving of the new note by the said Mary E. was in contemplation of and dependent upon ■the purchase of the forty-five acres of land by her, as we thiuk the facts fully establish, it is entirely immaterial whether or not the two parts of the act were in fact perfected at the same time.' The essential matter is, did they exist at the same time ? If she gave the note in contemplation of and with the understanding that she was to purchase the land, then the subsequent purchase by Mrs. Brookover was in effect the same as if the two acts, the purchase and the giving of the note, had occurred at the same momeut. The effect of the transaction was, then, that Mrs. Brookover by giving her note and taking up the Shafer note accomplished the purchase of the land; that is, her purchase of the land either before or subsequent to that time by relation operated as a purchase at the date she gave the note. The fact that the deed bears a subsequent date does not prove that the purchase was not made before its date; but even if the pur — 96 — chase had not heen perfected until the date of the deed, still the note having been given in contemplation and upon the faith of the purchase, the subsequent purchase, so far as the act affected Chesney and the note given upon the condition of the purchase, had relation to and took effect from the time the new note was given and the old note surrendered. It may bo remarked herej that there is no evidence in the record to show when the Shafer note was in fact surrendered to Mrs. Brookover by Chesney. It may not have been surrendered until after the deed from Martin V. C. was made to said Mary E., or at the time the endorsement of September 16, 1875, was made on it by J. S. Brookover, the husband of said Mary E. In this view, which, we think, is not only conceded by the counsel for the appellee, but fully sustained by the facts, the said Mary E. was, at the time she gave Chesney her note, the equitable owner of said forty-five acres of land and subsequently became the legal owner by a conveyance of the legal title to her from said Martin Y. C., that said note was given for a debt of one thousand dollars due to Chesney, which was an express lien on said land, and she obtained credit on her purchase from the said Martin Y. C. for the full amount of the debt she thus assumed to pay Chesney. She made the Shafer debt, for which her vendor, the said Martin Y. C., had made himself primarily responsible, her own debt. She became the owner of the land on which said debt was charged as an express lien, and the payer of said debt at the same time. It is not claimed that there was any express agreement that Chesney was to release his lien on said land, or that said lien was in fact released. On the contrary, the record show's that the lien -was not in fact released. How, excluding the parol testimony by which it was attempted to prove that it was expressly agreed the lien of Chesney should remain in force to secure the note of said Mary E., let us determine whether or not, as between Chesney and the said Mary E., the more act of substituting the note of said Mary E. for said Shafer note, without the release of the lien or any express agreement to release it, operated in law' as a release of Chesney’s lien on the land for said debt ? The doctrine is well settled both in Yirginia and this — 97 — State, that the giving of a new note for a previous one which had become due, will not be regarded as an absolute extin-guishment or payment of the precedent note or pre-existing debt, unless it be so expressly agreed, whether the new note was that of one previously bound or of a stranger — Dunlap v. Shanklin, 10 W. Va. 662; Feamster v. Withrow, 12 Id. 611; Bantz v. Basnett, Id. 772; Bank v. Goode, 21 Id. 455, 465 and cases there cited. Nor will the surrender of the old note, of itself, raise a presumption of an agreement to extinguish the debt by the giving of the new note; and especially will no such presumption arise where the creditor would thereby lose some security which he held when he took the new note — Bank v. Good, supra; 2 Dan. on Neg. lust. §§ 1266, 1267. Where the new note is that of a third person, the surrender of the old note will be held to bq prima facie a discharge of the old note and a release of the maker of such old note from personal liability tor the debt; but where, in a case like the one under consideration, the holder of the old note had a specific lien on land as security for the debt and by an arrangement between the maker of the old and the maker of the new note, the said land becomes the property of the latter, who at the same time agrees to assume said debt as a part of the consideration for the land, the execution of a new note for said debt will not operate an extinguishment of said debt unless it is so expressly agreed. By this arrangement the maker of the new note became the real debtor and was bound to pay it before the new note was given. The giving of the new note was not then in fact the giving of a note by a third party or stranger, but merely the giving of a note by a party already bound for the debt and in no respect, except in form, differs from the'ease of a debtor giving a new note in renewal of a note previously given by him. And, as we have seen, the authorities are uniform that the debt in the latter case would not be extinguished even when the previous note was surrendered unless it was so expressly agreed. Much less would it operate as a release of the security held by the creditor for such debt. I am, therefore, of the opinion that the giving of the new note by Mrs. Brookover and the surrender of the Shafer note by Cheshey to her and her de — 98 — livery of it to Martin Y. 0. Brookover, who really owed and was bound to pay it, operated as an extinguishment of said note and a release ot Shafer and said Martin Y. 0. from all liability to Chesney for said debt; but- inasmuch as Mrs. Brookover had assumed to pay said debt and had become the owner of tfie land on which it operated as a lien and was a part of the purchase-money therefor, the giving of her note for said debt did not extinguish the debt or release the lien of the land, no express agreement to that effect having been shown, and it appearing affirmatively that the lien was not in fact released. As between her and Chesney the debt continued as a lion on the land after the new note was given by her. The next enquiry is, does the appellee, John A. Dille, as a subsequent purchaser of the land, occupy any higher position than Mary E. did prior to her deed to him ? Dille admits that he examined the records and found the trust-deed and vendor’s lien on the land to secure the payment of said debt properly recorded. But whether he did so or not is immaterial, because the law conclusively charges him with notice of said recorded liens. After finding these liens recorded and also that a deed had been made by said Martin Y. C. to Mary E. Brookover, he testifies, that he was “informed by said Mary E. or her husband that said trust of Chesney had been paid oft and discharged, and that the note of said Shafer to Chesney was in the hands of said Martin Y. C. Brookover; that afterwards, on December 4, 1876, the said Martin Y. C. exhibited to him what purported to be said Shafer note with certain endorsements thereon of which he then took a copy.” The said copy is the same referred to in the answer of said Dille and has been hereinbefore given. Tie further testifies, that some days after this he informed the plaintiff as administrator of said Chesney that he was about to take a deed of trust upon the forty-five acres of land and that the Brookovers claimed that said Shafer note had been discharged by Mrs. Mary E. Brookover giving her note for the debt, and that the plaintiff replied, “ I expect it is true that Mr. Chesney took Mrs. Brookover’s note in place of the Shafer note for,” he said, “Tfound among the papers of said Chesney Mrs. Brookover’s note to said Chesney for one thousand dollars payable some time in the year 1879.” — 99 — And being asked whether he considered said land good security tor nine hundred dollars, the plaintiff answered he did and asked Dille to arrange to secure a note for a small amount due to his, plaintiffs, son against Mrs. Brookover which Dille agreed to do and did for plaintiff. In regard to this conversation the plaintiff testifies: “I told him (Dille) that we claimed that the original deed of trust was good for said Mary E. Brookover note; * * * that he said, we had released the Shafer deed of trust to Chesney and taken Mrs. Brookover’s note in' lieu of our Shafer deed of trust note. I told him we had never released it nor made any deed of release.” Plaintiff further says, that he never told said Dille or any one else that the trust-lien was in any way released or discharged from the payment of said debt. He admits that his son’s debt was secured in the Dille trust-deed and afterwards paid by Dille. From this testimony it is apparent that the plaintiff did nothing to estop him from asserting the Chesney debt and lien on the land against the appellee, Dille. In fact he did nothing that could in any manner have misled Dille. The plaintiff and Dille had the same information about the condition of the Chesney debt, they both knew that Mrs. Brook-over’s note was given for the Shafer debt in part payment for the forty-five acres of land and that neither the Shafer trust-deed nor the Martin V. C. Brookover vendor’s lien had ever been released. The only question then was one of law as to whether the transaction between Chesney and the Brookovers operated in law as a discharge of the Chesney lifen on the, land. Of this Dille was as capable of judging as the plaintiff. Dille no doubt was of opinion that said transaction did operate as a release of said lien and acted accordingly. In this we think he was mistaken. He was informed of all the facts and with that knowledge he took his conveyance from Mrs. Brookover. His erroneous declaration of the legal effect of said facts cannot afford him any protection. Where the facts are known ignorance of the legal consequences which flow from those facts, will not confer the character of a bona fide purchaser without notice. Consequently, the appellee, Dille, having taken his trust-deed with notice of facts, which showed the infirmity of his ven — 100 — dor’s title, he can occupy no Mger ground than Mrs. Brook-over, and having held that her title was subject to the lien of the Chesney debt, the lien oí his trust-deed must also be held to be subject to said Chesney debt. Bor the foregoing reasons the decree of the circuit court must he reversed with costs to the appellant against the appellees, John A. Dille, Mary E. Brookover and Martin Y. C. Brookover; and the cause is remande'1 to the circuit court for further proceedings there to he had according to the principles announced in this opinion. Reversed and Remanded.