Clinchfiedd Coal Corp. v. Steinman

PRITCHARD, Circuit Judge. In the case of Lipps v. Collier, Phillip Fleming, and others, it was alleged by the plaintiff, who brought the action as a judgment creditor and was seeking to subject the land to the payment of his judgment, that prior to that date Fleming had conveyed these lands to Collier, but that the deed had been lost or misplaced; the purpose of the action being to set up the lost deed in order that the plaintiff might subject the lands as the lands of Collier for the payment of his debt. Collier and Fleming answered, and, among other things, admitted that Collier was the true owner of' the premises. As we have heretofore stated, three decrees were entered in this suit, dated, respectively, October 23, 1874, May 22, 1873, and April 6, 1874, the second of which decrees recites that Phillip Fleming executed a deed to James A. Collier, which was properly acknowledged, conveying the land in controversy, and that the same had been lost, and decrees that Collier hold the land free from all claims of Fleming, and further provides that the same should be recorded and indexed in the deed book of the county. This decree was recorded and indexed on June 3, 1873, more than a year prior to the conveyance of Fleming to Price. ' Notwithstanding the entry of this decree, Fleming executed a'deed to A. J. Steinman and Price on the 18th day of December, 1874, purporting to convey the land in controversy. However, plaintiff insists that at the time he took this deed from Fleming, he had no knowledge of the suit of Dipps against Collier et ah, and that he did not have notice that Collier claimed to be the owner of the lands in controversy, and that therefore he is an innocent purchaser for value. Defendant insists that the proceedings in the suit of Dipps v. Collier were duly entered upon record of the court, and that, in addition thereto, a copy of the decree, declaring Collier to be the owner of the lands now in dispute, was recorded in the clerk’s office in pursuance of section 2510, Code 1904, which is in the following language: “Tlie clerk of the court wherein there is any partition of, or assignment of dower in, land under any order, or any recovery of land under judgment or decree, shall transmit to the clerk of the court of each county or corporation wherein such land is, or if the land lies within the corporate limits of the city of Richmond, to the clerk of the chancery court of the said city, a copy of such order, judgment, or decree, and of such partition or assignment, and of the order confirming the same, and along therewith such description of the land as may appear in the papers of the cause. And the clerk of the court of such county or corporation, or of the said chancery court, as the case may be, shall record the same in his deed book, and index it in the name [561] of the person who had the land before, and also in the name of the person who became entitled under such partition, assignment, or recovery.” The defendant further insists that a copy of this decree was registered and properly indexed; that if this was not sufficient to have put plaintiff upon notice as to defendant’s rights, it was sufficient to put plaintiff upon inquiry as to the true facts, ahd if he had availed himself of the information thus afforded, as it was his duty to do, he could have ascertained that these lands did not belong to Fleming, but had been conveyed to Collier and those under whom defendant now claims. There are numerous assignments of1 error, but we do not deem it necessary to refer to the first, second, third, and fourth, inasmuch as we are of the opinion that they are without merit. [1] The plaintiff, Steinman, was introduced as a witness in his own behalf for the purpose of showing that he was an innocent purchaser for value from Phillip Fleming. Upon cross-examination he was asked: “Q. Mr. Steinman, when you bought this and other tracts of coal in this country, did you or not know as a rule titles were defective? A. Yes, sir; and for that reason I was very careful to employ attorneys to examine all the titles. * * *” Witness was then asked the following question: “Q. Did your knowledge that the titles were generally defective and dangerous affect the price that you would pay for property?” The plaintiff objected to this question. Counsel for defendant insisted that the question was relevant, and, among other things, stated that they expected to prove that titles in that section were generally defective and dangerous, which caused plaintiff to pay only small prices and to hazard only small amounts. The court sustained plaintiff’s objection and the fifth assignment of error relates to the ruling of the court as respects this point. While it is true that there is no direct evidence as to the value of this land in 1874, at the time plaintiff purchased it, yet it is alleged and admitted that at this time it is worth more than $2,000, and it was admitted by plaintiff that he only paid the sum of $125 when he purchased it. The fact that 1,000 acres were conveyed for $125 is, in our opinion, relevant upon the question as to whether plaintiff was a purchaser for value. This, taken in connection with the fact that the titles in that country were generally defective, would be some evidence for the consideration of the jury. According to plaintiff’s admission,, he was well aware of the fact that the titles to property in that section were more or less defective, and the further fact that he was only willing to pay the sum of $125 for 1,000 acres of land tends strongly to show that he realized, at the time he made the purchase, that he was taking a §peculative risk, as to the validity of the title to the property which he was purchasing. Having testified that he had knowledge of' the fact that titles were defective, it was competent for defendant to inquire as to whether the defective condition of titles did or did not affect the price that he paid for this property. [562] In order that the plea that the plaintiff was a purchaser for value without notice should avail him, it was incumbent upon the plaintiff to show that he paid a fair value for the land and purchased the same without notice. • While it is difficult to lay down any fixed rule by which the term “bona fide purchaser for value” is to be tested, we think that there is evidence in this record which, if irue, excludes the plaintiff from that status. In Worthy v. Caddell, 76 N. C. 82, Pearson, C. J., says; “The leading case (in N. C.) upon the subject ‘what is a valuable consideration’ (Fullenwider v. Roberts, 20 N. C. 420), covered only the meaning of the words, ‘a purchaser for valuable consideration,’ in the statute of 27th Eliz., as to subsequent purchasers, but the discussion, in the opinion, is extended to 13th Eliz., as to creditors. From that fountain we may drink. By it we leam that in order to protect himself against the claim of a prior donee, or of a creditor, the party assuming to be a purchaser for valuable consideration, * * * not up to the full value, but to a price paid which would not cause surprise, or make any one exclaim, ‘he got the land for nothing, there must have been some fraud or contrivance about it.’ ” Harris v. De Graffenreid, 33 N. C. 89. In determining as to whether a purchaser had had notice of any defect of title, inadequacy of price is a potent factor. In some instances, it has been held that gross inadequacy of price is, within itself, sufficient to put the purchaser on notice that the title is defective, and thus charge him with constructive notice. In any event, gross inadequacy of price should be considered, together with other facts, as tending to prove that the purchaser took title with notice of diverse rights or of defects of title. Webber v. Taylor, 55 N. C. 9; Fullenwider v. Roberts, 20 N. C. 420; Harris v. De Graffenreid, 33 N. C. 89. The Supreme Court of North Carolina in the case of Cox v. Wall, 132 N. C. 730, 44 S. E. 635, quotes with approval from the case of Weber v. Rothchild, 15 Or. 390, 15 Pac. 650, 3 Am. St. Rep. 162, as follows: “Here tbe defendant Rotbcbild has alleged facts In one part of his answer tending to show that he is a bona fide purchaser for value without notice of this property, but he has offered no evidence whatever on those issues. The plea of a bona fide purchaser for value, as here alleged, is an affirmative defense interposed by the defendant, and in this connection it is not perceived that it differs from other affirmative defenses. The party having the affirmative of the issue must offer evidence to support it. Another rule of law equally elementary which is frequently applied in such cases, is that when a fact is peculiarly within the knowledge of a.party, he must furnish the necessary evidence of such fact.” Also in the case of Bugg v. Seay (1908) 107 Va. 648, 60 S. E. 89, 122 Am. St. Rep. 877, the court said: “If a party claiming to be a purchaser of land for a valuable consideration without notice of a prior unrecorded conveyance can maintain an action of ejectment against the grantee therein, he can only do so by showing that he received his conveyance and actually paid the purchase money before he had notice of the prior unrecorded deed. Such proof is necessary in a court of equity, where the protection of a bona fide purchaser for value without notice is usually set up as a defense (Lamar v. Hale, 79 Va. 147, and eases cited; Wasserman v. Metzger, 105 Va. 744, 54 S. E. 893, 7 L. R. A. [N. S.] 1019, and cases cited; 2 Min. Inst. [4th Ed.] 767, etc.; 1 Perry on Trusts [5th Ed.] § 219); and, a fortiori, less proof would not be required of the plaintiff [563] in an action of ejectment seeking to recover tlie land in the possession of the grantee in the prior unrecorded conveyance.” Plaintiff relies upon the defense that he was a bona fide purchaser for value without notice, and the burden is upon him to disclose such information as he may possess touching the facts upon which he relies to sustain his contention. For the reasons stated, we are of the opinion that the court below erred, in refusing to submit this testimony to the jury. [2] The sixth assignment of error is directed to bill of exceptions numbered 7 (bill of exceptions numbered 6, being abandoned). As we have stated, plaintiff testified that before purchasing the land in controversy, he employed Judge G. W. Kilgore, an attorney, to examine the title and report upon it. The defendant offered Judge Kilgore as a witness and proved by him that if he did examine the title, as to which he had no recollection, he looked in the index of deed books concerning the title, and that this was his invariable custom, and that the title could not have been examined without doing so. This evidence was offered for the purpose of showing that Steinman’s attorney, while engaged in the examination of the titles, saw the index, if indeed he did not see the record itself, and that this was sufficient to put him upon inquiry, and that therefore Steinman was charged with notice of' all that equity which it would have availed, and that he could not now claim to be an innocent purchaser. The defendant then offered certified copies from index of Deed Book No. 3, from the county records of Wise county, in which the decree recited in the deed from Fleming to Collier was recorded; the copies in question are as follows: v-j “Fleming, Phillip and wife v. (Decree) James A. Collier, page No. 19.” “Collier, James A. from deed P. Fleming, page No. 19.” Plaintiff objected to the introduction of these copies from the index upon the ground that the decrees in question were entered in the suit of Morgan T. Lipps v. James A. Collier, and not a suit of Phillip Fleming against James A. Collier, and that it is not shown when this index and decree' was put on the book, and the index is not a record, but merely a notation pointing to the record. The defendant insists that the court erred in sustaining the objection to the introduction of this evidence, in that the attorney, who was employed by the plaintiff to examine and report upon the title, saw these entries in the book where deeds and records were recorded, and that they informed him that there had been a decree concerning the land in a suit between -Fleming and Collier, to be found on page 19, and that if he looked at page 19, he found the decree entered fully, and that it cannot be presumed that he did not look, and that therefore plaintiff is charged with notice of all the decree shows, and is not therefore an innocent purchaser. As we have stated, Judge Kilgore says that he has no recollection of having made an examination of the title of Phillip Fleming for the plaintiff, but was not willing to testify positively that he had not made such an examination. Pie admits that he examined titles for [564] the plaintiff and Price, and says that he supposed he kept a memorandum of the same, but it was destroyed at the time his house was burned. He also testified that in 1874, the deeds in Wise county were not kept up and indexed as now, but that he is not prepared to say that this deed was not indexed at the time the examination was made. The evidence of Judge Kilgore, owing to the lapse of time, is not very clear, and we can appreciate how an attorney actively engaged in the practice is liable to forget many of the transactions incident to the work in which he is engaged, but it seems highly improbable that attorneys representing purchasers and examining titles in this country would not have known of the existence of the pendency of a suit of this character. The plaintiff testified that Kilgore was his attorney, and that he made an examination of these titles while acting as attorney. For this purpose Kilgore stood in the shoes of the plaintiff, and the plaintiff is bound by anything that he discovered, or by the exercise of ordinary diligence could have discovered, as respects the ownership of these lands, and it is a significant fact in this connection that Mr. Irvine, an attorney for plaintiff in this action, when he came to examine the records of the county where this land is situated, had no difficulty in finding this decree from the index, copies of which are now offered in evidence. The second paragraph of the copies offered is in the following language: “Collier, James A. from deed P. Fleming, page 19.” It.was from this entry that Mr. Irvine readily found the decree entered in ,the suit of Kipps against Collier, Fleming and others.. We think that upon the admitted facts and the record evidence which was excluded in this case the purchaser was put upon notice, that is, that the record showed -a condition which should have caused a reasonably prudent man to. have examined the same in full. This opinion is based upon the manner in which the judgment was indexed, and the further fact that the purchaser knew that titles in that section, were defective, and purchased the land at a nominal sum when compared to its value. -The evidence excluded should have been admitted, and its exclusion requires that the cause be remanded for a new trial. For the reasons stated the judgment of the lower court is reversed, and the cause is remanded for further proceedings in accordance with the views herein expressed. Reversed. WADDIKK, District Judge, dissents.