Richmond v. Ashcraft

GOODE, J. (after stating the facts). — In passing on this appeal we have not been helped by brief or argument for plaintiff as we were entitled to be, considering the difficult points of law involved and the authorities arrayed by defendants’s counsel in support of their propositions. They insist a verdict should have been directed for their client because plaintiff’s own testimony demonstrates he made the improvements in controversy with full knowledge of her claim and title, and therefore not in good faith or prior to notice. The statute on which the action was bro'ugJit read's thus: “If a judgment or decree of dispossession shall be given in an action for the recovery of possession of premises, or in any real action in favor of a person having a better title thereto, against a person in the possession, held by himself or by his tenant, of any lands, tenements or hereditaments, such person may recover, in a court of competent jurisdiction, compensation for all improvements made by him in good faith on such lands, tenements or hereditaments, prior to his having had notice of such adverse title.” [R. S. 1899, sec, 3072.] Said statute allows compensation to a defeated occupant for betterments, only in the contingency of their having been made in good faith and before he had notice of the title which prevailed against him. The legislation on this subject varies considerably in the different — 198 — States, and hence the adjudications on the question of what circumstances will justify a judgment for compensation, vary too with the diverse language of the statutes and, in some measure, in consequence of judicial disagreements regarding the equitable principles applicable to the subject. We cite infra those cases we have found wherein the courts held more or less pointedly, in favor of the occupant’s good faith and claim for compensation, even though he improved with knowledge or notice of the hostile title, if he believed, on reasonable grounds, it was worthless in law. Most, or all, of these cases dealt with statutes unlike our own in that they required less explicitly than do ours, not only good faith on the part of the occupant, but absence of prior notice of the adverse title, as conditions prerequisite to recovery. [Petit v. Railroad, 119 Mich. 492; Thomas v. Wagner, 131 Mich. 601; Griswold v. Bragg (Conn.), 6 Fed. Rep. 342, 346; Wells v. Riley, 2 Dill. (Ia.) 566; Harrison v. Castner, 11 Ohio St. 339; Whitney v. Richardson, 31 Vt. 300; Barrett v. Stradl, 73 Wis. 389; Dorn v. Dunham, 24 Texas, 266, 278; Parrish v. Jackson, 69 Texas, 614.] Every opinion on the question we have looked into, except Pugh v. Bell, 2 T. B. Mon. 125, requires the betterments to have been put on the land in good faith, but partly from general reasons and partly from statutory discrepancies, the courts disagree about the circumstances Avhich will prevent that quality from being ascribed to the occupant. [Warvelle, Ejectment, sec. 357, passim secs. 546, 649.] The terms “good faith” and “notice” are intimately related in jurisprudence, but are not of uniform meaning. The former retains, in some measure, the popular sense of honest belief, but its technical significance depends largely on the doctrine of notice as developed in the progress of the equity system. Considered with reference to and as influenced by notice, the term “good faith” bears several legal meanings according to the subject-matter of the litigation in which it is used. As applied to the purchase of a — 199 — parcel of land, the title to which has passed from the grantor by a prior recorded deed or incumbrance, the constructive notice of the prior conveyance which the record imparts, prevents one taking title subsequently from being a purchaser in good faith. [Turk v. Funk, 68 Mo. 19.] When the controversy is between the record owner of land and a defeated occupant seeking pay for improvements, such constructive notice of the adverse title will not impeach the good faith of the occupant in putting betterments on the land, and this can be done only by proof that he had actual notice of the successful title when the improvements were made. [Hill v. Tissier, 15 Mo. App. 291.] But in this class of cases the occupant may be found to have had actual notice of the adverse title from proof that he knew other facts which, if followed up, would have led to notice; and if, with such knowledge of collateral facts, the occupant fails to investigate, he will be charged with knowledge of whatever would have been learned by proper inquiry. [Lee v. Bowman, 55 Mo. 400.] Those examples illustrate two senses attached to the phrase “in good faith” under the influence of the doctrine of notice, and perhaps a third might be drawn from the law of negotiable paper. [Hamilton v. Marks, 63 Mo. 167.] In discussing the significance of the terms as used, in the statute relevant to the present case, oür courts have said they were adopted by the legislature from equity with the full meaning and force given to them in that system of jurisprudence; saying, further, in substance, that “notice” and “good faith” cannot co-exist, for it is an equity doctrine of universal recognition that he who takes with notice takes subject to the claim, and the notice which will suffice for this purpose does not mean direct and positive information, hut anything calculated to put a prudent man on the alert.- [Lee v. Bowman, supra; Marlow v. Leiter, 87 Mo. App. 504.] The rule that notice of a fact will be imputed to a man who remains ignorant of it from neglecting to follow up a sufficient clue, is applied care — 200 — fully in equity, but we have no reason to set forth the rules for its application, or ask whether it is adapted to cases like the one in hand, as the Supreme Court holds it is. The clear effect of Lee v. Bowman is, that if a defeated occupant had notice, in the chancery sense, of the successful title before he improved the land, he should be denied the status of an improver in good faith; and this rule has been enforced consistently by our courts, with the qualification already stated regarding the inadequacy of constructive record notice to impugn the bona fides of the occupant. [Hill v. Tissier, 15 Mo. App. 299; Pierce v. Rollins, 60 Mo. App. 497, 508; Stump v. Hornbeck, Id. 367; Marlow v. Leiter, 87 Mo. App. 584, 589; Kugel v. Knuckles, 95 Mo. App. 670; Gallenkamp v. Westmeyer, 116 Mo. App. 680; Sires v. Clark, 112 S. W. 114; Brown v. Baldwin, 121 Mo. 106.] We have found no pointed adjudication in this State of the question whether an honest but erroneous opinion in favor of the security of his own title, will suffice to uphold the occupant’s demand for compensation, if he had notice of the existence of the adverse title, and, considering it worthless, made betterments. The conclusion to be drawn from the decisions and judicial comments, is against this proposition and in favor of the view that notice of a title adversely held is incompatible with good faith, regardless of the opinion of the occupant concerning the validity of such title. A person who claims to own land in the possession of another, may bar the occupant from compensation for betterments by giving him notice in writing of the claim and its nature. [R. S. 1899, sec. 3080.] This statute cannot be construed to allow an exception in favor of an occupant who thinks the hostile title is bad and makes betterments regardless of the written notice. In Brown v. Baldwin, the relief was denied the occupant because he had been notified in writing of the better title before he improved, though the Supreme Court thought he had acted from faith in his own title. This authority settles the law against the — 201 — right of a party who improves after formal notice, to compensation; even though he deemed the hostile title worthless. And in Lee v. Bowman, the Supreme Court held actual notice of the adverse claim, however derived, was as potent to bar compensation as when formally given in writing. That is to say, the kind of notice which is imputed from facts sufficient to arouse inquiry, is accorded the same efficacy as the statutory notice. It may be the Legislature intended any notice except the statutory one, should leave the question of good faith open; but it is enough for us to say the law has been declared the other way by the Supreme Court. The Missouri cases do not quite cover the point of whether an occupant is entitled to payment for bettering the land while he cherished an opinion, on reasonable grounds, that his own title was good and an outstanding one of which he knew, bad. In the absence of a direct precedent, and inasmuch as this doctrine has been accepted-by eminent courts and contains some equity, we have endeavored to ascertain what rule is supported by the weight of those outside judgments which were not pronounced under the influence of statutes more favorable to the occupant than ours. Allowing compensation is admitted to be attended with this injustice; the betterments may be unsuited to the use and purposes of the real owner of the land, or more expensive than he can afford; and the disposition is to confine the remedy to such instances as fall clearly within the terms of the statute, or in the absence of a statute, within the rules of 'equity. • [Warvelle, Ejectment, sec. 606.] It goes without saying that no court will deny the occupant relief because his title turned out to be bad; for this would defeat the remedy, which proceeds on the theory that the improver will lose to a better title, and aims to reimburse him for enhancing, in good faith, the value of the land. [Jones v. Perry, 10 Yerg. 59; Krause v. Means, 12 Kas. 335.] Nevertheless, faith in his own title as against an adverse one of which we was aware, is not enough to confer the right to — 202 — reimbursement. This is according to the weight of adjudication and the texts of commentators. [Walker v. Quigg, 6 Watts, 87; 31 Am. Dec. 452; Jackson v. Loomis, 4 Cow. 658, 15 Am. Dec. 351 and note; Morrison v. Robinson, 31 Pa. St. 456; Hall v. Hall, 30 W. Va. 779; Luthecum v. Thomas, 59 Wend. 574; Montgomery v. Whitfield, 41 La. Ann. 649; White v. Stokes, 67 Ark. 174, 189; Holmes v. McGee, 64 Miss. 129; Horton v. Sledge, 29 Ala. 478, 498; Gordon v. Tracy, 74 Ala. 232; Greene v. Biddle, 8 Whart. 1, 79; Canal Bank v. Deffebach, 4 Dak. 20, 41; Sedgwick-Waite, Land Titles (2 Ed.), secs. 694, et seq.; Warvelle, Ejectment, sec. 553.] In Holmes v. McGee, on facts like those before us, the Supreme Court of Mississippi determined the point under examination and said: “On his own testimony the appellant was not a bona-fide holder of the land so as to entitle him to compensation for improvements under section 2512 of the Code of 1880. When he purchased and made the improvements he knew all the facts about the title. True, he thought the tax title was good, and sufficient to defeat the claim of the McGee heirs. In this he was mistaken, and as he knew the facts and mistook the law, the sincerity of his erroneous belief is not sufficient to bring him within Cole v. Johnson, 53 Miss. 94.” The so-called Texas rule is condemned both on' principle and authority, in the treatise we have cited; and we think the argument for the proposition that compensation ought to be refused when the occupant had notice, is unanswerable, if he not only knew of the outstanding title but was not led by the holder to believe it would never be asserted in hostility to his own. Turning now to the rulings on the instructions given in the present case, we find the first instruction granted for plaintiff left out the- element of notice and authorized a verdict for him if he made the improvements in good faith, thereby failing to take account of the effect notice of defendant’s claim would have on the demand of plaintiff. The first instruction granted by the court of — 203 — its own motion went further and adopted the Texas Rule. It follows the case was submitted to the jury on erroneous principles of law. The question remains of whether, on the entire evidence, plaintiff’s demand must be defeated as a matter of law. Beyond doubt he was apprised of the incidents which had occurred in connection with the title after the first sale under the execution against defendant’s husband in 1893, and knew defendant had refused to deliver him the deed conveying any interest which might be vested in her. Notwithstanding these facts there is a strong equity in his favor. The case is to be distinguished from» Brown v. Baldwin, supra., wherein it appéared the title which prevailed had been asserted continuously and the occupants repeatedly notified in writing of the rights of the holder. Moreover the latter began an action for possession as soon as negotiations for a sale had ceased between him and the occupants and nothing was said or done meanwhile to lull them into security or induce them to expend money on the property. In the case before us, though defendant had refused to make a deed to plaintiff, she took no step toward asserting her title until aroused into activity by his suit to quiet title filed six years later, and then merely to remove what he supposed was a technical blemish. During those years plaintiff made improvements which trebled the value of the land. He had offered to convey the property to defendant before they were made if she would pay him what he Avas out. This she was not bound to do and cannot be estopped for refusing to do; and neither does his right to reimbursement depend on her omission to sue. [Whitney v. Richardson, 31 Vt. 300.] If she was not bound to say or do anything to put plaintiff on his guard, she had no right to lull him into false security by declarations adapted to induce the belief that her title was not inimical to his and would never be asserted against him. The evidence inclines to prove she misled plaintiff by saying she did not want the land, had never worked — 204 — it and would not work it if she had it. This matter needs further elucidation, hut makes an impression unfavorable to defendant as it stand's. All the cases on the subject say the notice an occupant must have to bar his recovery for improvements, is notice of an adverse title; and, indeed, these are the words of our statutes. Without laying down any broad rule, we think both the- statutes and the decisions contemplate notice of an outstanding title which the occupant has no reason, based on professions of the holder,, to believe will not be utilized. If assurances are given that it will not be, and the occupant improves on the faith of them, his claim for compensation falls within the'doctrine ok equitable estoppel, which has been recognized by courts as entitling a party, under appropriate circumstances, to pay for betterments, though made with knowledge that his title is defective. [Brown v. Baldwin, loc. cit. 125; Hall v. Hall, 30 Vt. 779, 784; Morris v. Terrell, 2 Rand. (Va.) 6; Cawdor v. Lewis, 1 Younge 9 Coll. 427; 2 Story, Eq. Jur. (17 Ed.), secs. 385, 655, 799 and cases cited.] Such decrees are given upon the general principles of equity jurisprudence and independent of any statute; but we do not see that our statutes would hinder the application of those principles to this case, if what defendant said would have induced a prudent man, apprised of all the facts plaintiff knew, to believe defendant did not intend to disturb him. Story says if the real owner has fraudulently misled the other party regarding the title, the claim for compensation stands on the highest equity, and this theory of justice pervades our jurisprudence and has been enforced in a variety of cases to prevent owners from recovering their property, or recovering it without making purchasers or occupants whole. [Story, supra.; 3 Pomeroy, Eq. Jur. (3 Ed.), section 1241 and notes.] Among instances of its application are some wherein widows were denied their dower in realty because, by their assurances, they had led purchasers to believe they claimed no dower. [2 Scribner, Dower (2 — 205 — Ed), 266; Sweaney v. Malory, 62 Mo. 485.] After the declaration we have stated, defendant allowed plaintiff to improve the property through six years at much labor and expense to him; and, if otherwise she would have been under no duty to protest, it would work a fraud to exempt her from reimbursement if he relied on what she said and reasonably might rely on it. Her refusal to deliver the deed is a strong circumstance against plaintiff, but ought not to be treated as conclusive in view of her subsequent statement; which indicated that if she’ had intended to assert her title, she had abandoned the intention. On a rétrial of the case the pleadings may need amending to allege the estoppel. The judgment is reversed and the cause remanded. All concur.