Sheldon v. Powell

ME. COMMISSIONED POOEMAN prepared the following opinion for the court: ■This is an action to quiet title to certain lands situate in Cascade county; the plaintiff claiming title to them under a deed, and seeking to set aside a subsequent conveyance made to the defendant, which was recorded prior to the plaintiff’s deed. The — 253 — questions involved were submitted to a jury, which found for the plaintiff. The court, adopted the findings of the jury and rendered judgment for the plaintiff. Defendant has appealed from the judgment. The material facts appearing in the record are that one Gus Btreid made final proof on his homestead entry on February 10, 1 í)()0; that on that or the succeeding day he conveyed the land to the plaintiff by a deed; that the final receipt issued by the receiver to Streid was never recorded, and the. deed executed and delivered by him to the plaintiff was not recorded until March 11, 1901; that the plaintiff, immediately after the execution' of the deed to him, took possession of the land, made some improvements by plowing and farming the same during the year 1900, and also seeded a part of the land in the spring of 1901, leaving some of his farming impleiiients on the ground; that plaintiff had fenced the land, inclosing it in large fields with other land owned by him; that the land was assessed to plaintiff in 1900 and 1901; that he paid taxes thereon, but that plaintiff never resided upon the land; that early in March, 1901, Btreid made application to one Biros to obtain a loan. Bires, not desiring to loan money at this time,.introduced Btreid to the defendant, to whom Btreid then made application for the loan, offering this land as security. Defendant desiring to see the land, Btreid procured a team and went with the defendant, and they together looked over the land; Btreid telling the defendant that ho had fenced the land, and had plowed about twenty acres of it. There was no one on the land at this time, nor was there any house on if, except a broken-down shack that was uninhabitable. Defendant then returned to Great Falls, went to the office of the county clerk and recorder, and examined the title to the land, and found that the only instrument on record relating thereto was the government patent to Btreid, which Streid then bad in his possession, dated November 28, 1900, and recorded March (i, 1901. Defendant then loaned Streid $350, and as security therefor, on March 11, 1901, Btreid executed and de — 254 — livered to defendant a bargain and sale deed to tbe land, wbicli deed was recorded March 11, 1901, three days prior to the recording of plaintiff’s deed. The question is, which of these deeds, under this state of facts, should take the preference ? Section 1641 of the Oivil Code provides: “Every conveyance of real property other than a lease for a term not exceeding one year, is void as against any subsequent purchaser or incumbrancer, including an assignee of a mortgage, lease, or other conditional estate, of the same property, or any part thereof, in good faith and for a valuable consideration, whose conveyance is first duly recorded.” This section unequivocally makes all unrecorded deeds and conveyances, except leases for one year, void as to subsequent purchasers and incumbrancers in good faith and for a valuable consideration. Section 1644, however, provides: “An unrecorded instrument is valid as between the parties and those who have notice thereof.” It therefore becomes material to inquire what kind of notice is required by this latter section — whether possession is sufficient notice, and, if so, what kind of possession; whether the payment of taxes is sufficient notice, and on whom is the burden of proof ? Before the enactment of the recording laws, the only means a purchaser had of ascertaining whether his grantor had made a prior conveyance was by inquiry of the party in possession of the land, if occupied, and of those living in the vicinity. Long experience demonstrated that title or claim to title predicated upon information received by inquiriy of those who had no right to inquire into the prior ownership of land in which they had no interest, and whose conclusions might therefore be based upon casual observation or rumor, was productive not only of error, but actual fraud. To avoid what thus proved to be an evil, recording laws were enacted. These laws not only serve the double purpose of protecting Iona fide purchasers and of affording owners of land an opportunity of preserving their evidence of title, but of affording an opportunity for the acquisition of information in the preparation of valuable statistics relative to — 255 — economic conditions, and also of aiding in the preparation of assessment lists. If the same inquiry must be made now as before the laAvs were enacted, of what use are these laA\7s to the purchaser? "We do not understand that such is the contention of counsel,- but these laws undoubtedly at least limit the extent of such inquiry. Chief Justice Campbell, in the dissenting opinion filed by him in Shotwell v. Harrison, 22 Mich. 426, says: “The leading-case of Le Neve v. Le Neve, Ambler, 436, was the first in which it was .held that a /priority of record could be assailed in any court, and the doctrine has ever since been maintained that it may be done, but only by the most convincing proof of fraud, by notice or by Avant of consideration which raises a constructive fraud.' Fraud is the only ground of interference, and it cannot be presumed. The doctrine which assumes this without proof is at war Avith all the recognized legal presumptions, and I cannot but regard it as dangerous and unreasonable.” In Page v. Waring, 76 N. Y. 463, it is said: “Such possession under an unrecorded deed as Avill amount to notice to a subsequent purchaser must be under the unrecorded deed, and must be actual, open and visible, so that the subsequent grantee could go upon the lands and obtain by inquiriy there information of the unrecorded deed.” The sainé doctrine is held in Brown v. Volkening, 64 N. Y. 76. In Crossen v. Oliver, 37 Oregon, 514, 61 Pac. 885, the Supreme Court of Oregon sustained the following instruction Avith reference to a similar question: “The notice that will render a party a lienholder in bad faith must be something- more than would excite the suspicion of a cautious and wary person. It must be so clear and undoubted with respect to the existence of a prior right as to make it fraudulent in him afterwards to take and hold the property. In this case notice or knowledge that would bind Turner 01ÍArer, and render his judgment subject to the unrecorded deed of Crossen, must be either actual knoAvledge of the existence of this deed, or actual notice of such facts and — 256 — circumstances as Avould haAV enabled him, by following up such information, to harm ascertained that Orossen held this deed and claimed this land.” In Godfroy v. Disbrow, Walk. Ch. (Mich.) 260, it is held “that the presumption of lav is that a subsequent purchaser who lias got his deed first recorded is a bona fide purchaser without notice, until the contrary is made to appear.” See, also, Atwood v. Bearss, 47 Mich. 72, 10 N. W. 113. The payment of taxes on this land by the plaintiff Avas not of itself, under the la\v, constructive notice to the defendant that the plaintiff oAvned or claimed it. These three questions herein discussed Avere revicAved by this court in the AArell-considered case of Mullins v. Butte Hardware Co., 25 Mont. 525, 65 Pac. 1004, 87 Am. St. Rep. 430, inAvhich the court said : “The law is aycII settled that the actual, visible, notorious, continuous, exclusive and uuequiArocal possession of 'a definite tract of land by one rightfully in possession or holding under a A-alid title is a constructive notice to subsequent purchasers and incumbrancers of Avliatever estate or interest in the land is held by the occupant, equivalent in its extent and effects to the notice given by the recording or registration of his title.’ (2 Pomeroy’s Equity Jurisprudence, Sec. 615.) Such possession is eviden.ce of some right or title in the occupant, and is sufficient to put a subsequent purchaser or incumbrancer on inquiry as to the rights of the person then in possession.” Exceptions are then giAren to this general rule.' The court ’ further says: “The suggestion that the records 'of the county treasurer’s office shoAving that each of several occupants paid taxes on the parcel of ground in his possession Avere sufficient to put the appellants upon inquiry has already been considered, but may be further ansAvered by saying that such records are not of themselves constructive notice to purchasers or incumbrancers of the fact that certain persons haAre paid taxes. We are not advised of any statute Avliich declares the record of the payment of taxes to have that effect..” Quoting from the decision in — 257 — Hull v. Diehl, 21 Mont. 71, 52 Pac. 782, the court further says: “We are, however, satisfied that the good faith of the purchaser ■will sufficiently appear by proof of the record of conveyances showing title in his grantor at the time of the purchase, upon which record he had the right to rely, and is presumed to have relied. If he had actual notice of the prior conveyance, this is a fact affirmative in its nature, and it is therefore more reasonable to require it to be shown by the party claiming under the prior unrecorded deed than to call upon the purchaser to prove the negative.” The court also quotes with approval a part of the decision in Anthony v. Wheeler, 130 Ill. 128, 22 N. E. 494, 17 Am. St. Rep. 288, note, to the effect “that one claiming title to land by a deed to him purporting to be made for a valuable consideration is presumed to be a purchaser in good faith, without notice of prior unrecorded deeds, until the contrary is shown, and that the burden of proof to show notice and want of good faith is on the party attacking the deed.” In the trial of the case at bar the burden was by the trial court cast upon the defendant to show that he was not guilty of fraud in taking this second conveyance. This was error, for, under the decision in the Mullins Case, above quoted, the burden was upon the plaintiff to show that the defendant had notice, either actual or constructive, of this prior unrecorded deed. The evidence in this cause not only fails to show that the defendant was guilty of any fraud whatsoever- in accepting this second conveyance, but does show that the defendant had taken all the precaution which the law required of him. Streid was introduced to him by a friend, and made application for a loan. The defendant did not solicit the purchase of the land, but, after the application was made, he went to the land in company with Streid. Streid told him that he had fenced the land, and had plowed a part of it. He found nothing to indicate that Streid’s statements were not true. The defendant then went to the records, and found that there had been no conveyance recorded except the patent from the United States to Streid, and Streid had possession of the patent. The mere fact that the fence in — 258 — closing the land also inclosed other lands, or that there was more land plowed than Streid estimated that he had plowed, were in no manner contradictory of the recorded title in Streid. It is contended that, as this is an appeal from the judgment only, resort to the record may not be had to determine the sufficiency of the evidence. This is the rule where there is any substantial conflict in the evidence; but this court may examine the record to determine whether, as a matter of fact, there is any evidence to support the findings. (Whalen v. Harrison, 26 Mont. 316, 67 Pac. 934; Mahoney v. Dixon, 31 Mont. 107, 77 Pac. 519.) An examination of the record discloses that there is not any evidence to support the findings of the court, and for this reason we recommend that the judgment be reversed and the 'cause remanded. Per Curiam. — For the reasons given in the foregoing opinion, the judgment is reversed and the cause remanded.