American Mortgage Co. v. Hutchinson

Thayer, C. J., delivered the opinion of the court. The circuit court erred in trying the case after having set aside the verdict of the jury. It has no authority to try any action at law unless a jury trial is waived in the manner provided in the Civil Code. If the court had deemed it its duty to determine the case in favor of the respondent upon the law, it should have directed a verdict in favor of the respondent at the trial. As the case stands this court has no alternative but to reverse the judgment and remand the cause for a new trial. This is sufficient to dispose of the case so far as this court is concerned; but as it must go back for a new trial, it becomes our duty to declare the law applicable to the matters involved. The question presented is whether a conveyance of real property, not recorded as provided in title I of chapter XXI, — 341 — Ann. Code, is void as against a subsequent purchaser of the same property whose conveyance is first recorded, where the purchase is by quit-claim deed and there is no evidence, aside from the record, showing the subsequent purchaser to have been a purchaser in good faith and for a valuable consideration, and whether the execution of a mere quit-claim deed to real property by a grantor who had previously conveyed it by deed to another grantee, but which deed was not recorded at the time of the execution of the quit-claim deed, constitutes a conveyance of “the same real property.” Counsel for respondent virtually concedes that a purchaser under a quit-claim deed takes subject to outstanding equities in the property existing at the time of the purchase whether the purchaser had knowledge of them or not; but he contends that such a deed, under the recording act, stands upon the same footing as other forms of conveyance, and, if first recorded, is as effectual to annul a prior unrecorded deed to the same property. The question has given rise to much deliberation on the part of courts, and earnest discussion among law writers, though it is generally conceded that a grantee in a mere quit-claim deed acquires no right against outstanding equities which were valid against his grantor. Postel v. Palmer, 71 Iowa, 157; Martin v. Morris, 62 Wis. 418. Such also is the doctrine of the supreme court of the United States and of the courts of this State, as will be seen by a reference to the authorities cited in the appellants’ brief herein; but it is claimed by many that such a deed effectually destroys the right of a grantee under a prior deed not recorded as required by the registry act, although it would not affect a prior equity in his favor which was binding upon the grantor. This, to my mind, is a somewhat strange view. Why the rights of the grantee under the prior deed should be cut off when a charge upon the property created in his favor by the grantor would not be, seems remarkable. It may be said that the prior grantee had the right to, and should have put his deed upon record; but it may, with as — 342 — much reason, be said that he should haye had the charge upon the property put in a form that would haye entitled it to be recorded, and had it so done. The claim, it seems to me, amounts to this: If the owner of real property were to create a trust .against it, in favor of another, and then execute a quit-claim deed to the property to a third person, it would not affect the trust, although the grantee in the quit-claim deed had no knowledge of it; but if he had executed a deed outright to the cestui que trust, and then quit-claimed his interest in the property to a third person, and the prior deed not have been recorded, the rights of the grantee in the prior deed would be lost. According to that kind of logic the grantee in the prior deed would have a better standing in such a case if his deed were not witnessed or acknowledged so as to entitle it to be recorded; as he would then clearly have an outstanding equity which would be shielded from the effects of the quit-claim deed. The form of the deed under which the respondent claims title herein is not set out in the stipulation further than it is stated to be a quit-claim deed. We must, therefore, infer that it is a remise, release and quit-claim of the right, title and interest of the grantor in and to the property in suit. It did not purport to convey the property to the grantee, it only conveyed to him such right as the grantor might have therein; and it would be difficult to perceive how the former could have expected to acquire any right in the premises unless the latter might own an interest in them. The terms of the deed were satisfied whether the grantor was owner of the property in fee or had no estate whatever in it. The grantee bargained for no quantity or quality of estate; he bought whatever the grantor might have, be the same more or less; and I do not see what legerdemain could be resorted to which would vest him with an interest that the grantor had previously divested himself of, and was then owned by a third party. Purchasers of real property should be left free to make their own bargains, and the courts have no right to undertake to give them something which they did not buy and — 343 — the vendor did not own. The office oí a quit-claim deed is well understood, and although it is as effective, under modern legislation, to convey all the estate which can be transferred by a deed of bargain and sale, yet it shows upon its face that the grantee therein only contracts for such title to the property as the grantor has. Such a deed under section 3004, Ann. Code of Oregon, is sufficient to pass all the estate which the grantor could lawfully convey by a deed of bargain and sale; but a material difference is still recognized between the two forms of conveyance. A grantor, under the former conveyance, only intends ordinarily to convey such right to, or interest in, the property as he may have, and the grantee does not expect to acquire anything beyond that; while under the latter, the parties usually intend and expect a transfer of the property itself. It would be absurd for a grantor under a mere quit-claim deed to undertake to claim that he took title to the property freed from the previous acts of the grantor affecting that title. There is nothing in the nature of that character of conveyance which assures the grantee indemnity from such acts. He has no reason to believe that he has purchased a clear title to the property or anything more than-what the terms of his deed indicate. He does not undertake to purchase what his grantor has already sold and conveyed to another, whether the deed of conveyance is registered or unregistered, but he purchases what the grantor has remaining, if anything. This view, I think, is sustained by a majority of the cases cited by respondent’s counsel herein, and I believe that it is by the weight of authority generally. In the earlier case, —Brown v. Jackson, 3 Wheat. 450,—which is cited by said counsel, such a deed was held by the supreme court of the United States not to affect a prior unrecorded deed where its language showed that it was only intended to operate upon the right, title and interest which the grantor had at the time of its execution. What else a strictly quit-claim deed could operate upon I am not able to discover. In McConnell v. Read, 38 Am. Dec. 124, an early Illinois case, cited — 344 — by said counsel, the language of tbe court is well calculated to be misleading as regards the nature and character of a quit-claim deed. At pages 126,127, the court says: ‘ ‘A deed of release and quit-claim is as effectual for the-purpose of transferring title to land as a deed of bargain and sale; and the prior recording of such a deed will give it a preference over one previously executed, but which was subsequently recorded. In this respect there is no distinction between different forms of conveyance. As a general rule the one first recorded must prevail over one of older execution, when made in good faith, and when it appears to have been the intention of the parties to convey again the same lands which had been previously conveyed. But where the terms of the second deed do not necessarily embrace the lands previously conveyed, but, on the contrary, are such as to show that it was not the intention of the grantor to include them, the court will give it such construction as not to embrace them, and will not allow it to operate to the prejudice of the purchaser.’-' In that case one Arnett was owner of 80 acres of land, and on the twenty-first day of March, 1835, executed to the plaintiff a deed of release thereof, which was recorded on the same day; and on the first day of July, 1837, also executed to plaintiff a deed of bargain and sale for the same land, confirming and explaining the former deed of release. The defendant gave in evidence a deed from Arnett to one Rixford, dated May 12, 1827, and recorded October 1, 1836; and also several other deeds, constituting a connected chain of title to the said land from Rixford to himself. The court held that the deed of release from Arnett to the plaintiff, if unexplained, would transfer the land, the title to which the grantor had not previously divested himself by a valid transfer duly recorded. But that the plaintiff had furnished such evidence of the intention of the grantor by introducing the deed of bargain and sale from Arnett to himself as forbade such an interpretation of the conveyance, and sustained the defendant’s prior deed, concluding from the extraneous evidence that it might be fairly inferred thai — 345 — Arnett only intended by tbe quit-claim deed to transfer all right, title and interest therein which he then had. According to this decision, the plaintiff would have been secure in his title to the land under his deed of release if he had been content with it; but in order to make assurance doubly sure, he, two years thereafter, unfortunately obtained the second deed, which enabled the court to ascertain what the grantor’s intention was in the first one, and this resulted in his losing the property. • I think the case was correctly decided, but do not agree with the views expressed in the opinion announced by the learned court. In my opinion the court was in error in holding that the prior recording of a deed of release and quit-claim would give it a preference over one previously executed, but which was subsequently recorded; also in its holding that the words, ‘ ‘remise, release and forever quit-claim all right, title and interest to all and every part, etc., unexplained would transfer the tract of land designated, of the title to which the grantor had not previously divested himself, by a valid transfer duly recorded.” Nor dol admit that if said words unexplained would have had the effect to transfer such title to the said grantee, that they could be so explained as to convey an opposite meaning, by showing that the grantor at a subsequent time executed to him a second deed declaring what his intention and design were in making the first one; or that words in a deed, having a fixed and settled meaning, can be explained in that way to mean something different from what they purport to in the instrument, and which the law attaches to them. If such rule were to obtain, the tenure by which real property is held would be very insecure. The latter case and others following it seem to have gotten the Illinois courts into a line of error as to the effect of a quitclaim deed, which has become chronic, and from which they are unable to extricate themselves. In Brown et al. v. The Banner Coal & Oil Company, 97 Ill. 214,1 in which case the question arose, the supreme court of that State seemed to realize its helpless condition and inability to rid — 346 — itself of tbe unfortunate precedent which had been established. Chief Justice Dickey, in speaking for the court, says: ‘ ‘Counsel for appellants insist with much force that the grantee in such a quit-claim deed as that of Pollock, made in 1865” — a deed of all right, title, interest, .claim or demand of the grantor in and to the property — “is not a subsequent purchaser in good faith of the same thing which was conveyed by his former deed to Brown. Were this is -an open question before us, the suggestions presented in their argument'would be entitled to very grea consideration; but the question is settled in this State by a line of authorities, which constitute a rule of property and ought not to be disturbed by the courts.” So the court, following the “line of authorities,” held that as the deed did not contain words manifesting an intention not to include lands previously granted, or words suggestive of a former conveyance of the same land by the grantor, the grantee therein would be a purchaser thereof and protected by the registry act. It must, it seems to me, be humiliating to be compelled to make such a holding. The idea that the deed in question did not manifest an intention not to include lands previously granted, I can only regard as preposterous. Words may be, and often are, inserted in that form of deed which change its nature; but it then ceases to be a quit-claim deed and becomes in effect a deed of bargain and sale. The Tesas courts seem to have had much experience with that class of cases. The supreme court of that State, in Richardson et al. v. Levi et al., 67 Tex. 359, which is one of the cases cited by respondent’s counsel, held, that a deed which purports to convey only the right, title and interest of the grantor, will not protect the grantee against prior unregistered instruments; but not so where the deed purports to convey more than such right, title or interest. In that case the granting clause in the deed was, “grant, bargain, sell, demise, release and forever quitclaim unto the said -, his heirs and assigns, the following lots of land, etc., and the court held that the — 347 — grantee therein had his election in what way to take, and might take what either of these words would convey; that he was not restricted by the fact that his estate under one of the words would be of less value than under another; that he might therefore escape being charged with notice under the “quit-claim” by electing to take under the “grant, bargain and sale.” There is a class of cases which hold that a grantee under a quit claim deed will acquire a good title as against a prior grantee of the land from the same grantor where the prior conveyance is not recorded as required by the registry act, and the grantee under the quit-claim deed is shown to be a purchaser in good faith and for a valuable consideration. Fox v. Hall, 74 Mo. 315; Graff et al. v. Middleton et al., 43 Cal. 341, and Frey v. Clifford, 44 Cal. 335, belong to that class, and would seem to support the view of respondent’s counsel. But the decisions in the two California cases appear to be questioned by Temple J., in Allison v. Thomas, 72 Cal. 562. The learned judge in delivering the opinion of the court, after remarking that a purchaser of the right, title and interest of a judgment debtor took subject to all equities and secret defects, at page 564 of the case, says: “We do not overlook the case of Graff v. Middleton, in which it was held that under the twenty-sixth section of the recording act, then in force, a quit-claim deed received in good faith and for a valuable consideration would prevail over a prior unrecorded deed. That decision is made to turn upon the language of that statute defining the word conveyance. This ruling was followed in Frey v. Clifford, 44 Cal. 343, where the description of the estate conveyed was ‘all my right, title and interest’ of the grantor. Unless these cases are justified by the peculiar wording of the statute, they seem to be against the decisions elsewhere upon the subject. It has been uniformly held that a conveyance of the right, title and interest of the grantor vests in the ■purchaser only what the grantor himself could claim, and that the covenants in such deed, if there were any, were — 348 — limited to the estate described. ” Citing in support of the view a number of authorities. I have no particular fault, however, to find with the doctrine that a grantee under a quit-claim deed acquires a good title to the property as against a prior grantee thereof under the circumstances above mentioned. Where the grantor in such a case is in possession of the property, and executes the deed for a valuable and adequate consideration to the grantee who takes possession of it under the deed, I think it would be a wholesome and just rule to hold that his title to the property was superior to that of the grantee under the prior unrecorded conveyance, or to any outstanding equity against the property of which he had no notice. But whether he would be able to assert such superiority of title, under the strict rules of law, I express no opinion as it is unnecessary to do so under the circumstances of this case. I do, however, maintain that a grantee under a mere quit-claim deed reciting a nominal consideration, where no possession of the property is given under the deed, acquires no right to it as against a prior grantee, whether the deed of such grantee be recorded or not. The view which I entertain upon this subject is well expressed in the concluding part of an article by Charles C. Marshall, published in vol. 23, page 244, of the Albany Law Journal, which is as follows: “It will be seen from this review of the authorities that the force and effect of a deed of quit-claim is a matter not requiring adjudications by the courts. Its force is certainly dependent not upon its distinguishing words, but upon the intention of the parties as expressed in the deed. It may, in the absence of possession by the grantee or releasee, be void, as stated in Branham v. Mayor, and Bennett v. Irwin, supra; or if an intention to convey be recited, as in Lynch v. Livingstone, supra, it may have the force and effect of a deed of bargain and sale. The intent seems to be the controlling element. And this may be expressed in curious ways, — by a formal recital, by the existence of some former estate in the — 349 — release, by words of grant other than ‘remise, release and quit-claim. ’ Indeed, an adequate consideration or a covenant of warranty seems in some of the cases to imply an intent to convey the estate, as in the Massachusetts cases above referred to. But it is difficult to see wherein an intent can be implied in a naked quit-claim, by which we mean a quit-claim deed without covenants, and expressing only the nominal consideration of one dollar. As above intimated, it seems a matter of some doubt whether the protection of the recording acts could be extended under such a deed, for such a deed is perfectly consistent with the existence of a prior unrecorded deed to some third person. As it purports to release only such right as the releasor may have in the premises described, and as its nominal consideration of one dollar must in most cases be conspicuously inadequate, there seems sufficient to put the purchaser on his guard. If A., being actually vested with the fee to certain real estate, executes a quit-claim deed thereof to B., it is certain the fee would pass. The question is, is the record conclusive evidence of the existence of the fee in A. ? If A. had conveyed the fee to C. by a prior unrecorded deed, what is to prevent C. from setting up his unrecorded deed when there is nothing on the record from A. save the quit-claim deed? The two deeds do not conflict. The quit-claim deed with its nominal consideration purports to convey only such rights as A. may actually have. It may be something or nothing. And the recording act, it is suggested, will not give to an instrument of record any greater force or larger meaning than that expressed by its words. ” The same view, substantially, is also expressed by Watts, J., in delivering the opinion of the court in Thorn v. Newsom, 53 Am. R. 747; 64 Tex. 161, wherein he says: “While non-registered deeds are declared void by the statute as to subsequent purchasers for value and without notice, still the doctrine is well settled that a subsequent purchaser, although for value and without notice, who takes under strictly a quit-claim deed, that is, one by which — 350 — the chance of title, and not the land itself, is not conveyed, will not be accorded the protection of the statute, for the obvious reason that he contracted for the interest only that his vendor then had in the land. If the vendor had previously divested himself of the title to a portion or all of the land, to the extent of the divesture, there would be no right remaining in the vendor to pass by the quit-claim to the vendee. It is the then interest of the vendor for which he contracts, and it is to such interest only that he is entitled under the quit-claim deed.” There are many other authorities bearing upon this question which might be noticed, but they are too numerous and extensive to attempt it. Several of 'them, notably Chapman v. Sims, 53 Miss. 154, and Fox v. Hall, 74 Mo. 315, support the position assumed herein by respondent’s counsel. I think, however, that the weight of authority and reason is against it. The circumstances under which the deeds, in the Elliot line of title herein, were executed are not shown in the stipulation of the parties upon which the case was tried. All that appears therefrom is that Elliot quit-claimed the land and 240 acres of other land to DeLashmutt in June, 1881, and DeLashmutt, in August, 1881, quit-claimed it back to Elliot; then Elliot quit-claimed it to Wood August 21, 1881, and Wood, in November, 1881, quit-claimed it to Chapman, who in the same month quit-claimed it back to Wood. After the parties had thus tossed about their pretended title to the property for more than a year, Wood, on the nineteenth day of September, 1882, executed the warranty deed to Cavanaugh, upon which the respondent’s counsel predicates his point that “a quit-claim deed as a part of a chain of title is sufficient.” This deed is the only deed which purports to convey the land, though the subsequent ones from Cavanaugh and his grantees contained covenants against the grantor. The facts in the case are not therefore like those in Sherwood v. Moelle, 36 Fed. Rep. 478. There the chain of title was made up of warranty deeds, with the exception of one quit-claim deed; while here it is — 351 — made up of quit-claim deeds, with the exception of one warranty deed. The facts in the two cases also differ in another particular. In Sherwood v. Moelle the testimony showed that the grantee in the quit-claim deed “acted in good faith, in ignorance of the outstanding title not apparent of record, and paid full value for the land”; while in this case there is no evidence upon those points except that the grantee. DeLashmutt took the conveyance from Elliot without actual notice from Elliot and wife, except such as might be presumed or inferred from the character of the deed or condition of the county records. But the main difficulty in the respondent’s case is that Wood had nothing in the premises to convey or that Cavanaugh could expect to receive; he had no possession of the land, either actual or constructive. Foster and his grantees were in the constructive possession of it under the deed from Elliot and wife to Foster. The deed to DeLashmutt and from him to Wood conveyed no interest in the land to either of them. Elliot had neither possession, right to possession nor right of property therein. If he had had seisin of the land his deed to DeLashmutt and the deed from DeLashmutt to Wood might have vested it in the latter and thereby have constituted a claim of title. And I am not able to understand from the said stipulation how said last-named parties under the said quit-claim deeds can be said to have been subsequent purchasers “of the same real property or any portion thereof,” which was conveyed by Elliot back to Foster, within the meaning of section 3027, Ann. Code; and if their said transactions did not constitute them subsequent purchasers of the same property, then the conveyance to Foster was not affected thereby, and the deed to Cava-naugh did not entitle him and his grantees to the protection of said provision of the Code. The judgment will be reversed and the cause remanded as before indicated. Footnotes [1] (1) 35 Am. Rep. 105.