Work v. Brayton

Perkins, J. Bill by John C. Work against Benjamin C. and George Brayton, to foreclose a mortgage. These defendants answered, and thereupon one Charles S. Moore appeared and petitioned the Court to be made a defendant, with the Braytons, to the bill, asserting that he held claims which were a lien, paramount to the mortgage sought to be foreclosed, upon the land covered by the mortgage. The Court granted his petition, and, upon the final hearing of the cause, found that his lien had precedence, and decreed that it should be first discharged out of the proceeds of the sale of the mortgaged property. The facts of the case, as collected from the record, are as follows: Said Charles S. Moore held the title-bond of one Kelly, which called for a deed to the premises in question on [397] payment of the purchase-money. The purchase-money was paid, but no deed was received. Subsequently, on the 6th day of January, 1847, Moore sold said premises to Benjamin C. Brayton for 1,200 dollars, took his notes for that sum, and directed Kelly to convey to him the premises. Kelly accordingly made a warranty deed to Brayton, Moore at the time surrendering to the former his bond to be canceled. On the 20th of January, T847, said Benjamin G. Brayton mortgaged the premises to John C. Work, to secure a precedent debt owed by himself and George Brayton. The deed from Kelly to Brayton acknowledged the receipt of the purchase-money. Moore had taken possession under his bond, and continued to occupy the premises till after the execution of the mortgage by Brayton to Work. Work was a resident of New-York city, and the mortgage in question was taken in his absence from this state, by Mr. Baird, his attorney, to whom the claim secured by it had been intrusted for collection. The first inquiry raised is, whether Work is to be regarded as a purchaser for a valuable consideration. The question whether a mortgagee, in a mortgage given for the security of a pre-existing debt, is to be regarded as a purchaser for a valuable consideration, has been decided differently by different Courts; and there has been a like diversity of opinion upon the analogous question, whether the holder of commercial paper assigned as collateral security for a pre-existing debt, is to be treated as a holder for a valuable consideration. The latter of these questions this Court decided in the affirmative in Valette v. Mason, 1 Ind. R. 288; and it would seem that the principle of that case, applied to a mortgagee of real estate, to secure a like indebtedness, would require that he be regarded as a purchaser for a valuable consideration. We shall not go into a classification of the cases upon the point. We think, on principle, and as matter of public policy, a precedent debt should be regarded as a valuable consideration for the conveyance of real estate. If it is not to be so regarded, the titles of purchasers and mortgagees, for such a consideration, must be [398] of comparatively little value, as they may, at any time, be unexpectedly overrode by secret invisible liens for unpaid purchase-money to some former grantors, or by some other, till then unknown, alleged equitable claims, which might, in their origin, have been without trouble made secure by open, recorded instruments that would have been notice to all the world. Yet real estate, in this country, is almost as as much an article of trade as is any species of personal property. It is taken by the government as security for its loans; by corporations in payment of stock subscriptions, and as security for debts; and by individuals in a multiplicity of transactions; and being subject to sale on execution, it constitutes a great basis of credit generally. Hence, it is of the utmost importance that such legal principles may prevail as shall give confidence in, and solidity to, land titles. There is no hardship in requiring those who intend to hold incumbrances upon real estate to make them open and visible; and where they do not, they surely become accessory to frauds, trap-setters for honest men, and not entitled to any extraordinarily favorable consideration by Courts. A pre-existing debt is held to be a valuable consideration by Story, in the second volume of his Equity Jurisprudence, pp. 657, 658, and he cites for the doctrine Mitford v. Mitford, 9 Ves. 100, and Bayley v. Greenleaf, 7 Wheaton 46. In vol. 2, pt. 1, p. 73, of White and Tudor’s Leading Cases in Equity, they say, “similar decisions were made in Richson v. Richson, 2 Gratton 497, and in Day v. Dunham, 2 Johnson’s Chancery R. 112;” though this latter case has not been followed in New- York. Kent, in the 4th vol. of his Commentaries, p. 154, approves the doctrine, and expresses the conviction that it rests on grounds that will command general assent. He cites in support of it, Roberts v. Salisbury, 3 Gill and J. 425, and Gann v. Chester, 5 Yerger’s Tenn. R. 205. We have verified a part of the cases above referred to; to some of them we have not access. The remaining question in the cause is, was Work a mortgagee with notice of Moore’s lien for unpaid purchase399 money? We say lien, because we shall admit, for the purposes of this case, that one existed, though there is not a uniformity of opinion on the part of the Court touching the point. Work had not actual notice. Had he construetive? Moore was in possession of the premises mortgaged by Brayton to Work, and the question is, was that possession notice to the latter of a lien, on the part of the occupant, for unpaid purchase-money? It is laid down in all the books treating upon the subject, that possession is notice of the title, whatever it may be, of the possessor. What, then, was Moore’s title ? Upon what was his possession based? He had been the equitable owner of real estate, and in possession of it. He had sold, and procured it to be conveyed to another, but still remained in possession, without any contract, so far as appears, authorizing him to do so. He was, then, a mere tenant at sufferance, with the title of such a tenant and no other. 3 Sandf. (New-York) Ch. Rep. 176. His lien for unpaid purchase-money constituted no title, legal or equitable; gave him no right to possession; and his occupancy, in fact, was in no way connected with that lien. It existed as completely without possession as with it. If possession, therefore, can be regarded at all as notice of a lien for purchase-money, it is notice of more than title or claim of title. But without pursuing this particular idea, we think it will be conceded that Moore' can be regarded as standing in no better situation, touching this lien, than Kelly would have stood in, had he remained in possession after conveying to Brayton without receiving his purchase-money; in other words, that Moore, having sold and procured Kelly to convey, can be in no better attitude than though he had conveyed himself. Regarding Moore, then, as the grantor in the case, we can easily dispose of it; for the authorities seem sufficiently conclusive upon this position, viz., that where the deed of the grantor has been put upon record, acknowledging the receipt of the purchase-money, he will be estopped from relying on his continuance in possession as notice of a hen for purchasemqney, as subsequent purchasers are not bound to go [400] beyond the recorded declarations of the parties and inquire ijato their actual relations. Scott v. Gallagher, 14 Serg. and Rawle 389.—Woods v. Farmere, 7 Watts 382.—Newhall v. Pierce, 5 Pick. 495. The case before us is stronger still, as here the deed itself from Kelly to Brayton was exhibited to the attorney of Work, when he took the mortgage, to show the title. 3 Sugden on Vendors 470.—White v. Wakefield, 7 Simons 401.—4 Kent (6th ed.) 179, and note c. E. H. Brackett and G. S. Orth, for the plaintiff. R. C. Gregory and R. Jones, for the defendant. We think the Court below erred in postponing the mortgage to Moore’s lien, and that, hence, the decree of that Court must be reversed. Per Curiam. — The decree is reversed with costs. Cause remanded, &c.