Mercantile Co-Operative Bank v. Brown

Riely, J., delivered the opinion of the court. The appellee, J. P. Brown, applied to the Mercantile Cooperative Bank, of the city of New York, for theloan of $1,000, which he offered to secure by deed ot trust on a certain lot in the town of Shenandoah, Page county, Ya. This the bank agreed to do, if the security offered was sufficient, and the title to it good. It employed Mr. R. S. Parks, an attorney, to ex — 619 — amine the title and furnish an abstract thereof. The security and the title to it proving satisfactory, the bank sent a check for the loan to its attorney, payable to J. P. Brown, but to be held by the attorney until the deed of trust should be executed and acknowledged for record, and received the approval of the bank. The deed having been approved by the bank and returned to the attorney, the latter, on Mareh 13, 1891, turned over the cheek to Brown, taking his note for the loan, and delivered the deed to the clerk of the County Court of Page county, in his office, to be recorded. The deed having been duly executed and acknowledged for record, and the tax and recording fee being paid by the attorney, the clerk then and there admitted it to record, noting the time of its admission by an endorsement on the deed in the following words and figures : “A. R., March 13, 1891.” The attorney, on the same day, wrote to the bank that its check ■ had been delivered to Brown, the deed of trust admitted to record, and that as soon as the deed was transcribed upon the record he would forward it. A few days thereafter the attorney went to the clerk’s office and instructed the clerk not to record the deed until he should direct him to do so. This he did at the instance of Brown, who complained of delay in the payment of the check, although the evidence shows that it was paid in New "York without delay, four days after it was turned over to him. The deed remained in the clerk’s office until the 23d of June following, when the attorney went to the clerk’s office and ordered that it be recorded. The deputy clerk thereupon ran his pen through the words and figures, “March 13, 1891,” which had been endorsed on the deed at the time it was delivered to the clerk to be recorded, and wrote above them, “ June 23, 1891,” and the deed was then transcribed in the proper deed book. Brown, in the meantime, had applied to Lucretia J. Harnsberger for a loan of $1,500 upon the same lot of land. The — 620 — title to it was examined by her attorney, and, no encumbrance being disclosed, she made the loan, taking a deed of trust on the said property to secure it, which deed was admitted to record on June 10,1891. Which of the said deeds has priority is the first question to be decided, the property being insufficient to pay both of them. The deed securing the bank being duly executed and properly acknowledged for record, it was the duty of the clerk, upon its delivery to him, on March 13, 1891, with the amount of tax and recording fee, forthwith to admit it to record. This he did, as already shown. Its admission to record was an official act performed by him, and having been performed, it was not within his power to undo it. He could no more recall his official act admitting it to record, when he was ordered by the attorney to withhold its recordation, than he could have expunged its recordation from the deed book if it had been actually transcribed. When the bank, through its attorney, delivered the deed to the clerk to be recorded, and paid the tax and recording fee, its duty, in order to secure the lien under the deed of trust, was ended. The actual recordation in the deed book was a consequential act from its admission to record, to be performed by the clerk in the order of the admission by him of deeds to record, and as the condition of the business in his office permitted. The bank was entitled to its lien against purchasers and creditors from the time of the admission of the deed to record, and the subsequent act of the clerk, in attempting to change the time of its admission to record, at the request of the attorney was ineffectual, and could not affect the lien then and there acquired by the bank. The lien of its deed of trust, therefore, took effect from March 13, 1891, while that of Lucretia J. Harnsberger only commenced on the 10th day of June, 1891, that being the date of the admission of her deed of trust to record. But whether the bank, as against the appellees, who are — 621 — assignees of the Harusberger debt, can claim tbe benefit of its lien as of March 13, 1891, is another question, and is to be solved by the application of other principles. It appears from the evidence that $1,000 of the Ilarnsberger loan was transferred for value on the 28th day of July, 1893, to George W. Harnsberger, and the residue thereof on the same day to R. A. Bickers; and the assignees contend that the appellant bank having allowed the public record, showing that its deed was not recorded until the 23d of June, 1891, to remain so, without taking any steps to have it corrected, is estopped to claim otherwise as against them, they having relied upon, the recorded title. The evidence also shows that the deed of trust securing the bank was withdrawn by its attorney, from the clerk’s office, on the 11th day of February, 1892, and sent by him to the bank. The bank, therefore, had its deed of trust in its possession nearly eighteen months prior to the assignment of the Harnsberger lien to the appellees. The deed, when received by the bank, had upon it the following official endorsement by the clerk of the County Court of Page county: “ Page county, to-wit: The foregoing deed of trust was received in the clerk’s office of Page County Court June 23, 1891, and admitted to record. Test: A. Broaddus, C. C.” It thus appears that the bank, from the time of the receipt of its deed of trust, had in its possession the plain means of knowing when its deed of trust purported to have been admitted to record. It showed that it did not purport to have been admitted to record on the 13th of March, 1891, as the bank had been informed by its attorney was the case, but that the record in the clerk’s office showed that it was not received in that office and admitted to record until the 23rd of June, 1891. It is true that the president of the bank denies actual notice of this fact until about the time of the institution of this suit in 1896, but, having in his possession the deed itself, with the official certificate of the clerk endorsed thereon as to the time it was admitted to record, knowledge thereof will be imputed to the bank. — 622 — Actual knowledge of the truth as to the material facts, represented or concealed, is generally indispensable to the application of the doctrine of equitable estoppel, but like other general rules it has its exceptions. Actual knowledge is not indispensable where the circumstances are such that a knowledge of the truth is necessarily imputed to the party sought to be estopped; nor where he has been negligent in failing to perform some duty, whereby another has been misled to his injury or prejudice. 2 Pomeroy’s Eq. J,, secs. 808, 809; Bigelow on Estoppel (5th Ed.), ch. 19; Hughes v. Harvey, 75 Va. 200, 212; and Henshaw v. Bissell, 18 Wall. 255. The bank, instead of taking steps to have the date of the admission of its deed to record and the recordation thereof corrected, in accordance with the facts and its right, permitted the record to stand until the assignees of the Harnsberger loan had for value acquired her debt, and for years afterwards. ' It is the policy of the registry law that the evidence of titles should be recorded, and persons dealing with the subject of the recorded title have the right to rely upon the state of the title as it appears upon the public records, and upon the recordation thereof as having been duly made. It was the duty of the bank, if it would claim the benefit of the true date of the admission of its deed to record, within a reasonable time after the receipt of its deed showing the state of the record, to have taken the proper steps to have it corrected in accordance with the actual fact. The failure to do so was gross negligence. By its negligent conduct, the bank thereby represented to the world that the admission of its deed to record, as it appeared upon the public record of titles, was true. It is now estopped from asserting the contrary. The doctrine of equitable estoppel has its foundation in natural justice and good conscience. Where one man by the neglect of some duty leads another to believe in the existence of a certain state of facts, and under this belief the latter does an act whereby he is prejudiced, the former will not be permitted — 623 — to show as against the latter that the state of facts did not exist. He shall not by such course cause loss or injury to another. Such a change of position would be un conscientious and inequitable, and is sternly fordidden by honesty and fair dealing. Where one of two innocent persons must suffer a loss, it must be borne by that one of them who by his conduct—acts or omissions—has rendered the injury possible. The neglect of the bank to perform its duty to the public, and have the record of the admission of its deed to record corrected, could but have the effect to mislead purchasers and creditors, and did mislead the assignees of the Harnsberger debt, who innocently relied upon the recorded title. It would be a fraud on them to permit the bank now to deny what, by its omission of duty and acquiescence in the state of the public record, it represented to be true. It is therefore estopped to claim, as against them, that the lien of its deed of trust took effect prior to June 23, 1891. There is no error in the decree appealed from, and it is therefore affirmed.