Manogue v. Bryant

Mr. Justice Shepard delivered the opinion of the Court: 1. As between Bryant and the Lang brothers, the allegations of the bill and the proof in their support are sufficient — 256 — to sustain the decree correcting the description .in the deed of trust by extending the front line of the lot to the western wall of the hotel building and embracing the strip in controversy. There was nothing in the record title of the Langs to indicate the existence of this strip. The failure to include it expressly could only be discovered by actual survey or measurement, and there was nothing to suggest the need or importance of this. The hotel building covered it all without an intermediate wall to mark any division of the frontage. To cut off'the strip would not only force the construction of a new western wall for the hotel, but would seriously, if not irreparably, impair the value of the remainder of the building. When the Brice loan was made, his representatives understood and believed that the description of the premises covered the entire building. Bryant, likewise, acted under the same belief. And it is wholly unreasonable to believe that he would knowingly have lent his money upon premises covered in part only by the building. It is plain, and has been conceded on the argument, that Manogue himself understood that the whole of the ground occupied by the hotel building was included in the mortgage. This equitable right, so well established, is clearly superior to the equity of the judgment creditor, unless its enforcement is precluded by the operation of the statute which will be hereafter considered. Brown v. Pierce, 7 Wall. 205; Hume v. Riggs, 12 App. D. C. 355, 367, and authorities cited. 2. As against Manogue, the decree cannot be sustained on the ground that he is estopped by the allegations of the creditor’s bill, with which this litigation began, to claim the existence of a legal title in the Langs to the strip in controversy subject to execution on his judgment as a lien taking priority over Bryant’s equity. That judgment became a lien upon all lands owned by the defendants therein, regardless of his knowledge or want of knowledge of such ownership. Believing, as he evidently — 257 — did in good faith, that the whole of the land covered by the hotel was included in the description of the premises as recited in the Bryant and Brice trust deeds, he filed the bill to subject the equitable estate of the mortgagors to the satisfaction of his judgment. Bryant was not misled to his prejudice by any allegation of the bill. And it is clearly not a case where Manogue was put to his election between inconsistent remedies in such a way as that, having elected, he must remain bound thereby. 3. The Act of Congress, approved April 29,1878, relating to the effect of unrecorded instruments as to creditors and subsequent purchasers, reads as follows: “All deeds, deeds of trust, mortgages, conveyances, covenants, agreements, or any instrument of writing which by law is entitled to be recorded in the office of the recorder of deeds, shall take effect and be valid, as to creditors and as to subsequent purchasers for valuable consideration without notice, from the time when such deed, deed of trust, mortgage, conveyance, covenant, agreement, or instrument in writing shall, after having been acknowledged, proved or certified, as the case may be, be delivered to the recorder of deeds for record, and from that time only.” It is contended on behalf of the appellee, in support of the decree, that this act does not apply to his claim of a prior equitable lien upon the strip of land in controversy, because founded in an equity for the correction of the trust deed, dependent upon parol evidence for its establishment, and therefore incapable of entry upon record for his protection. In a case arising under this státute, where, apparently, the judgment creditor had not been put upon notice, by record or otherwise, of the equity of the mortgagee for correction or reformation, the same contention was denied by the former appellate court of this District. Ruppert v. Haske, 5 Mackey, 262. We see no reason to depart from that decision. If an — 258 — unrecorded conveyance, the description in which is perfect, must be declared invalid under the statute, as against the subsequently acquired rights of purchasers in good faith, and of creditors, then, for as strong a reason, a mere equity arising out of a mistake of description in a recorded instrument ought to be subordinated to the regularly acquired lien of a judgment against the grantor therein. Wilcox v. Leominster Nat. Bank, 43 Minn. 541; Nugent v. Pnebatsch, 61 Miss. 402; N. O. Canal & B. Co. v. Montgomery, 95 U. S. 16, 18. In the case last cited, the controversy, it is true, was between a prior and a subsequent mortgagee; but that would seem to be immaterial. The purpose of the statute is to protect judgment creditors as well as purchasers against claims of which they have no notice. The case chiefly relied on to support the contention is that of Floyd v. Harding, 28 Gratt. 401. In that case Leftwich sold land to Turnbull, received the whole of the purchase money, and put Turnbull in possession, but made him no conveyance at the time. He subsequently made the conveyance, but before its execution Harding recovered a judgment against him and docketed the same in the manner required by law to secure a lien. As between Harding and the grantee of Turnbull, it was held that the statute did not apply to an equitable title of this character. The reasoning of the court is not convincing, and the conclusion would be more satisfactory had it been based upon the ground that Turnbull’s actual, notorious, and exclusive possession was sufficient notice of his title within the spirit of the statute, as was done in a like case by the Supreme Court of Texas under a statute copied substantially from that of Virginia. Barnett v. Vincent, 69 Tex. 685. It may be remarked also that the present case is not one of an equity or trust imposed or resulting by construction of law out of a transaction in which the beneficial claimant has not, and could not have exercised any control. Some such equities have been regarded as superior to judgment — 259 — liens under statutes substantially like, and even more strict in expression, than the one under present consideration. Blankenship v. Douglas, 26 Tex. 225; Calvert v. Roche, 59 Tex. 463 ; Parker v. Coop, 60 Tex. 111, 117; Miss. Valley RR. Co. v. Chicago, etc., RR. Co., 58 Miss. 846, 854. But the question whether any such equity is within the scope of our statute is not involved in this case and will not be passed upon. 4. If the decree in this case can be upheld at all, it must be upon the ground of knowledge by Manogue of the equity of Bryant before the recovery of his judgment and the attachment of its lien. Subsequent uotice, actual or constructive, would clearly be of no avail. Statutes of the same general nature as that governing in this jurisdiction prevail in most if not all of the States of the Union, and very many decisions have been made in cases arising under them. “In a large number of the States,” says Mr. Pomeroy, “if a judgment creditor has notice of a prior unrecorded mortgage, or other outstanding equitable lien upon or interest in the land of his judgment debtor, at the time when he recovers the judgment, the lien arising from the docket of his judgment is postponed to such prior encumbrance or equity. In a few of the States, however, the statutory language is regarded as so peremptory, and the necessity of recording so complete, that even notice of an unrecorded mortgage or other subsisting equity, given to the creditor before the recovery and docketing of his judgment, is held not to affect the priority of the lien acquired by the subsequent docketed judgment.” 2 Pom. Eq., Sec. 723. Many cases are cited, in support of this statement, and many more might be added, but they are too numerous for review. Our examination of them leads us to endorse the conclusion stated in Lamberton v. National Bank of Winona, 24 Minn. 281, 287. The statute of Minnesota made an unrecorded deed void as againt any subsequent purchaser in — 260 — good faith and for a valuable consideration, of the same real estate or any portion thereof, whose conveyance shall be first duly recorded, or against any attachment levied thereon, or any judgment lawfully obtained at the suit of any party against the person in whose name the title appears of record, prior to the recording of such conveyance. The grantee was in actual possession under an unrecorded deed when the judgment was regularly obtained against his grantor. The court admitted that, under a strict construction, the letter of the statute would avoid the unrecorded deed as against the judgment creditor, notwithstanding the notice given by the possession under it, but adopted a liberal interpretation in accord with what it conceived to be the true intent of the legislature, and upheld the right of the grantee in possession under the unrecorded deed. After stating the statutes of many of the States, and the decisions giving them interpretation, it was said; “ From the almost uniform current of decisions we gather these rules : That the general intent of the statutes of registry is to protect innocent persons against prejudice from secret conveyances, by providing means through which they can know the condition of titles; that where they acquire such knowledge by means other than registry, they do not stand in need of such protection, and do not, as a general rule, come within the purview of the statutes; and that the statutes will be so construed unless their terms exclude such construction.” See, also, Lebanon Sav. Bank v. Hollenbeck, 29 Minn. 322 ; United States v. Howgate, 2 Mackey, 408, 416 ; Duke v. Clark, 58 Miss. 465, 475 ; Walker v. Ellidge, 65 Ala. 51, 57 ; Grace v. Wade, 45 Tex. 522, 527 ; Overstreet v. Manning, 67 Tex. 657, 663; Stevenson v. Texas RR. Co., 105 U. S. 703; Columbus Buggy Co. v. Graves, 108 Ill. 459, 462; Noyes v. Hall, 97 U. S. 34, 37 ; Massey v. Hubbard, 18 Fla. 688, 690; Swan v. Moore, 14 La. Ann. 883, 886. There is nothing in the terms of our statute materially different from those referred to above, and the same was — 261 — assumed to be its construction by Mr. Justice Miller, who delivered the opinion of the Supreme Court of the United States in the only case involving any point under that statute, that has gone to that tribunal. Hitz v. Nat. Met. Bank, 111 U. S. 722, 728. The knowledge of facts or circumstances reasonably sufficient to put a person of ordinary prudence upon inquiry which, if pursued with proper diligence, would lead to the discovery of the actual condition of the title, is equivalent to knowledge direct and certain. Now, if in this case there were inaccuracies or conflicts in the terms of the description, apparent upon the face of the record, which the judgment' creditor’s knowledge of the property and its surrounding conditions would enable him to interpret and readily ascertain -the meaning intended by the parties, there would be no difficulty in reaching a conclusion unfavorable to him. Carter v. Hawkins, 62 Tex. 393, 396 ; Erickson v. Rafferty, 79 Ill. 209. Here, however, there is no conflict in the recitals, and the error in the call for frontage upon M street is not apparent upon the face of the record. Nor, on the other hand, is it a case of actual possession by a vendee or mortgagee of the whole of the premises which, of itself, would constitute notice. But notwithstanding the absence of these conditions, the peculiar circumstances of the case are, in our opinion, sufficient to constitute notice to the judgment creditor, before the rendition of his judgment, of the equitable rights of the mortgagee. His knowledge of the premises, of the condition and uses of the building, and his unavoidable apprehension of the improbability that any reasonable person would make a loan upon an undivided and inseparable part of the building which gave value to the security, led him to believe, as he clearly and confessedly did believe, that the deed of trust embraced, and was intended by the parties to embrace, all — 262 — of the ground occupied by the building. Had he, at the time of commencing his suit against the Langs, and with a view to ascertain the ownership of unencumbered land by them, actually measured the M street front and found the unembraced strip, the conditions above mentioned would inevitably have suggested to him the reasonable probability of the mutual mistake of the parties in describing that frontage as thirty-four feet instead of forty-two and thirty-five one hundredths feet in length. Inquiry of the parties would have led to direct information of the fact. The decree will be affirmed, with costs. Affirmed.