111 Minn. 247 | Minn. | 1910
Action to recover damages for the alleged wrongful and unlawful cutting and removing of a quantity of timber from land owned by plaintiff. A verdict was directed for defendant, and plaintiff appealed from an order denying a new trial.
The only question presented is whether plaintiff was a purchaser of the land in good faith and without notice of the rights of defendant under its logging permit. The conveyance to plaintiff, was, as-expressed in the deed, “subject, however, to a permit to cut and remove the soft wood timber thereon, said permit expiring May 1, 1907.” This exception was not only inserted in the deed, but at the time plaintiff purchased the land he was verbally informed of the existence of the permit, so that there is no controversy about the fact that he had actual notice of the fact that the timber had been previously sold. The permit in fact expired September 1, 1907. but the date was erroneously given in the deed as May 1.
The essential elements of a bona fide purchase of real property :are (1) the payment of a valuable consideration; (2) good faith, without purpose to take an unfair advantage of third persons; and (3) absence of notice, actual or constructive, of outstanding rights ■of others. Of these, the last only is involved in this case.
It is the contention of plaintiff that he was required to take notice ■only of the permit mentioned in his deed, and, having bought and paid for the property in reliance on the recital therein that the permit ■expired May 1, 1907, he was not chargeable with bad faith by his failure to make further inquiry, and, in any event, that he was justified in relying and acting upon the statement'of the grantor’s agent .as to the time the permit expired, and was under no obligation r.o pursue the subject further. We are unable to concur in this view ■of the law.
The law imputes to a person knowledge of all facts which the ■exercise of common prudence or ordinary diligence would by investigation and inquiry develop and disclose. No person can claim the position of bona fide purchaser of property, when he is informed before making the purchase that a third person has some title or interest adverse to the grantor. If he is informed of an outstanding ■claim, he is under legal obligation to investigate and inquire into its merits, and, failing to do so, is not a.purchaser in good faith, within the meaning of the law, if such outstanding claim or title be valid.
In the case at bar, plaintiff was informed of the outstanding permit, and this conveyed to him notice of the existence of rights in some other person, and of all the facts which inquiry eoncernine: those
As no inquiry was made, plaintiff as a matter of law was not a •purchaser in good faith, unless his further contention be sound that the information verbally communicated to him by his grantor’s agent rendered unnecessary further inquiry. Coxmsel cite, in support of this particular theory of the case that inquiry of the grantor was sufficient, Jones v. Smith, 1 Hare, 43, and other English cases. While these authorities seem to sustain the claim, they are clearly distinguishable from a case involving facts like those at bar, and were in effect overruled by the later English case of Patman v. Harland, 17 Ch. D. 353. It was held in that case, involving a lease of land, that the lessee had no right to rely upon the statements of his lessor as to the effect of an outstanding claim to the property.
The rule laid down by that ease is followed generally by the courts of this country. Acree v. Rozzell, 32 Ky. Law Rep. 1342, 108 S. W. 846; Asher v. Ford, 33 Ky. Law Rep. 222, 109 S. W. 899; Pocahontas v. St. Lawrence, 63 W. Va. 685, 60 S. E. 890; Simmons Creek Coal Co. v. Doran, 142 U. S. 417, 12 Sup. Ct. 239, 35 L. Ed. 1063; Price v. McDonald, 1 Md. 403, 54 Am. Dec. 657; Wilson v. Hunter, 30 Ind. 466; Deason v. Taylor, 53 Miss. 697; Booth v. Yenney (N. J. Eq.) 66 Atl. 1092; Peterson v. Weist, 48 Wash. 339, 93 Pac. 519.
The case of Mercantile Nat. Bank v. Parsons, 54 Minn. 56, 55 N. W. 825, 40 Am. St. 299, does not sustain plaintiff’s contention that a sufficient inquiry was made concerning the rights of the holder •of the outstanding permit. It appeared in that case that Eletcher had conveyed, certain property to one Crowell “as trustee,” the ■Cleveland Mortgage Company being the beneficiary, which trust was invalid. Crowell subsequently made a declaration of trust in favor
In the case at bar, plaintiff had actual notice of an outstanding permit to cut the timber, and he made no inquiry whatever to learu the name of the person holding the same, or as to its terms and provisions. He relied wholly upon the statements of his grantor that it expired on May 1, 1907. This was not the prudent inquiry required of a bona fide purchaser. The rights of third persons cannot thus be extiuguished. The purchaser of property incumbered by an outstanding but unrecorded mortgage, of which he had no notice, might, if plaintiff’s position be sound, with equal propriety contend that reliance upon the assertions of his grantor, the mortgagor, that the mortgage had been paid, was sufficient to give him the standing of a bona fide purchaser. This, of course, could not be so, nor the mortgagee thus eliminated from consideration. It does not matter that the name of the permit holder did not appear in the deed. Plaintiff should have made an effort to ascertain the name. Wade, Notice, § 313; Christmas v. Mitchell, 3 Ir. Eq. (N. C.) 535. Nor was the information conveyed by the deed so indefinite and uncertain as to dispense with an effort on plaintiff’s part to learn the facts. Wade, Notice, § 316; Bellas v. Lloyd, 2 Watts (Pa.) 401. Plaintiff’s information was unequivocal, and notified him of the fact, and this was all that was necessary to put him upon inquiry. He occupies no better position than his grantor. St. John v. Sinclair, 108 Minn. 274, 122 N. W. 164.
This disposes of all questions requiring special mention, including the assignments of error challenging the admission of evidence tend
Order affirmed.