44 Wis. 498 | Wis. | 1878
The evidence as above recited, presents the case in the most favorable light for the plaintiff, and much more favorably, perhaps, than it would appear if all the details of it were given.
Upon this evidence the learned counsel for the respective parties do not differ as to the effect which must be given to the deed and contract of August 27, 1870. Both admit that the deed of that date, connected with the contract of the same date, clearly established the relation of mortgagor and mortgagee between the parties. It was a mortgage from Jones to Shove to secure the payment of the sum of $2,300, then^owing by Jones to him, and any other sums which said Jones might be owing to said Shove for future advances, with interest payable semi-annually at ten per cent., the principal to become due in four years from the date. It is insisted, however, by the counsel for the plaintiff, that the surrender of this contract of 1870, and the taking of the new contract by Mr. Jones, July 15, 1874, created a new relation between the parties; that the surrender of the contract which was the defeasance to the deed of 1870, left the absolute title to the lands in the grantee, Shove, and changed the relations of the parties from mortgagor and mortgagee to vendor and vendee, the mortgagee becoming the vendor, and the mortgagor the vendee. The argument in favor of this view of the case is presented with great ability and clearness, so that its point and force are readily comprehended by the court. On the other side, the counsel for the appellant has with equal ability and clearness presented the argument against the construction given to the new arrangement made in 1874, by the counsel for the respondent, and, as we think, has conclusively shown that no such resultas is contended for could result from that arrangement.
In this state, New York, Michigan, and some other states, a mortgage conveys no estate to the mortgagee, in the lands described^n the mortgage. Its only effe'ct is to give him and his assigns a lien upon the lands for the sum of money secured by it; and the title in fee to the lands mortgaged remains all the time in the mortgagor, subject to such lien. The mortgagee can no more be said to have title to or an estate in the lands mortgaged, than'a person having a mechanic’s lien or lien by judgment duly docketed according to law. The mortgagee has a lien created by deed, and the judgment creditor by the judgment of a court.
That this must be so is clear from the decisions of this court, as well as the uniform course of decision of the courts in those states where the laws upon the subject of mortgages are like those of this state.
By the laws of this state, the inortgagee'is not entitled to possession of the mortgaged premises, and cannot maintain any action to recover the possession, either before or after condition broken. If he dies, the mortgage interest descends as personal property to his next of kin. Sec. 12, ch. 100, R. S. 1858. And if his personal representative is compelled to sell the estate mortgaged to collect the debt secured, and bids in the property for the benefit of the estate, the lands so bid in are to be still treated as personal assets in his hands. Sec. 13,
• On the other hand, the mortgagor holds the estate in fee notwithstanding the mortgage. He - can only convey that estate as he can convey any other estate in fee, by deed duly executed. If he die, the estate descends to his heirs as other
It was urged that, because this court has held that if the mortgagee gets the peaceable possession after condition broken, he cannot be ejected by the mortgagor without first tendering the amount due on the mortgage, it has recognized a title to the lands mortgaged in the mortgagee.
This does not follow. These decisions simply recognize the right of the pledgee to take the possession of the pledge if he can, in order to pay himself out of the rents and profits; and, if he receives enough out of such rents and profits to pay his debt, his mortgage is thereby satisfied, and he may then be ejected by the mortgagor. See Gillett v. Eaton, 6 Wis., 30; Tollman v. Ely, id., 244; Stark v. Brown, 12 id., 572; Hennesy v. Farrell, 20 id., 42. Neither of these cases puts the right of the mortgagee to retain the possession after condition broken on the. ground that he has a title in fee or otherwise, but upon the ground that it would be inequitable to turn him out of possession until his debt was paid; and for the further reason that the mortgagee ought not to be put to the cost of a foreclosure sale to get possession or to pay his debt. It is possible that these cases may have gone in part on the theory that, after condition broken, the mortgagee had some title to the lands. It is clear, however, that if the mortgagee had no title before condition broken, he could not have any after. The old theory of a mortgage was, that it conveyed the title,
In the case of Trimm v. Marsh, 54 N. Y., 599, Commissioner Reynolds, in discussing this question on pp. 608-609, says: “Ordinarily the mere change of possession of real estate would not divest the legal title of the owner, and I can see nothing in the fact of actual possession by a mortgagee that should work such result. Legal estates in land cannot be transferred by the mere act of taking possession, whether with or without the consent of the owner, unless the possession be held adversely for a sufficient time to ripen into a legal title. The possession of a mortgagee is apparently attended with more incidents of legal ownership than any other mere possession. It is sanctioned by a right which defends the possession against the true owner of the fee until the mortgage debt is fully discharged. In such case, the creditor, instead of leaving the debtor in possession and relying upon his intangible legal lien for his security, takes the thing pledged in his own possession, and enjoys its use until his debt is j>aid. He must account for profits and waste to his debtor, and when his debt is paid by the receipt of rents and profits or in any other manner, his lien is extinguished and his possession is no longer justified.” A similar view of the effect of the mortgagee’s possession is taken by Commissioner Eael, p. 606. The cases in New York, where the statutes on the subject of mortgages are similar to the statutes of this state, all hold to the doctrine above stated, that, notwithstanding the mortgage, the title to the fee of the land remains in the mortgagor, and the mortgagee has only a chattel interest or lien upon the lands mortgaged. Trimm v. Marsh, supra; Packer v.
It was urged by the learned counsel for the respondent, that a different rule might and ought to be sustained when the mortgage was created by an absolute deed, and the defeasance was either by parol or by a separate written instrument. We have examined the cases, and find that the same effect is to be given to all mortgages without regard to the form in which they are made.
This court held in Kent v. Agard, 24 Wis., 378, that, in an action of ejectment, the defendant might show by parol evidence that a deed absolute on its face, under which plaintiff claimed, was in fact given to secure a debt, and was therefore a mortgage; and, if the evidence established the fact, it was a defense to the plaintiff’s action. In Magoon v. Callahan, 39 Wis., 141-45, and Sage v. McLaughlin, 34 id., 550-57, it was held that a mortgage in the shape of a deed absolute, with a defeasance in a separate writing, must be foreclosed in the same manner as a pure mortgage, and the premises be sold by order of the court, with like privilege of redemption to the mortgagor. These cases show that when the conveyance is shown to be a mortgage, no matter what its form, the title does not pass to the grantee, any more than it does where there is an ordinary mortgage. There is no good reason why the form should make any difference as to the rights of the parties. By a mortgage in its ordinary form, there is an absolute grant of the title to the lands, in terms, to the mortgagee, with a defeasance as a separate clause; the fact that this separate clause is in a separate paper, or by parol, does not in the
It being admitted that the deed and contract of the 27th of August, 1870, was a mortgage, with all its incidents, we hold that the relation of mortgagor and mortgagee continued at the time this action was commenced, for the reason that Jones has never conveyed his title as mortgagor to Shove or his grantee, nor has Shove ever foreclosed his mortgage in any way known to the law.
The mere surrender of the contract of 1870, in 1874, certainly conveyed no title to Shove; and the indorsement made January 31, 1876, upon the contract of 1874, was not such an instrument as would convey the legal estate of Jones in the lands described therein. It was not sealed, and was only witnessed by one witness. If it could, under any state of the evidence, be construed into a contract which in equity would bind him to convey the legal estate,- that would not help the plaintiff in this action of ejectment, in which he can only recover by showing a legal title in himself. The case of Odell v. Montross, supra, sustains this view of the case in all its circumstances.
We are also of the opinion that the contract of 1874 did not change the relations of the parties, even were it admissible in this state to hold, as it is held in Massachusetts, that a mortgage conveys an estate in fee to the mortgagee, subject to be defeated by the payment of the debt secured by it. The contract itself shows that, in the language of the witness Markham, it was a substitute for the one of 1870; it recites the deed of 1870, and says it is given for the increased consideration mentioned in the contract then made; and it requires the payment of interest on the increased amount. Construed as a contract for the sale of the land, it would be most peculiar.
The indorsement of Jammy 31,1816, is of a similar nature, intended no doubt by the grantee, Shove, to foreclose the rights of Jones, and convert that which was before a mortgage into an absolute title; but it fails to do so for want of formality, if for no other reason. But, independent of the insufficiency of the paper to transfer the legal title of Jones, it substantially leaves Shove in the position of mortgagee. He held the note of Jones for $1,236.70, which does not appear to have been surrendered at the time he took the surrender of the contract, nor does he give him any release for the $3,356.96; and he agrees to take the land and sell it to pay these debts, and return the surplus to Jones. This, standing alone, would constitute him a mortgagee, and he could not pass the legal title to the lands to his grantee without a further conveyance
17 fit is further argued, with great ability and zeal, by the coun-X seT’for the respondent, that, admitting that the relation of ' mortgagor and mortgagee existed between Jones and Shove at •the date of the deed to the plaintiff, the plaintiff is a tona fide purchaser without notice of the title or interest of Jones, and therefore is entitled to recover in this action.’
This argument is based mainly upon the provisions 'of sec. 32, ch. 86, R. S. 1858. And it is insisted that the evidence does not tend to show that the plaintiff had “ actual notice,” within the meaning of said section, of the rights of Jones as mortgagor, at the time of his purchase.
It is sought to give force to this argument by the claim that this provision of our statute was taken verbatim from the laws of Massachusetts, and that we are therefore to be controlled in its construction by the decisions of the highest court of that state, made before our adoption of the law here. It is true that the section above quoted is found as an existing law in the statute of Massachusetts at the time of its enactment here. It is also true that the same provision is found in the R. S. of Michigan of 1846; and from an examination of our ch. 59, R. S. 1849, and ch. 65, R. S. of Michigan of 1846, it will be found that .our law is in most of its provisions a more exact copy of the law of Michigan than it is'of that of Massachusetts. Our law declaring the effeet of the want of registry of a deed as to subsequent purchasers is entirely different
That the purchaser had notice of the mortgagor’s rights in this action must be found, if found at all, upon proof of the following facts: “ That the mortgagor remained in the actual and exclusive possession of the lands in controversy from the date of the deed, August 27, 1870, down to the date of the plaintiff’s deed, 1876; that the plaintiff knew of this possession at the time he took his deed; that he knew the land was called the Jones farm; that, only a few weeks before he took his deed from Shove, he went to the son of Jones, the defendant in this action, and offered to buy the south twenty acres, and to pay $3,000 for it; that he had spoken with Benjamin Jones about buying it; that he had always known it as the Jones farm, but did not know who was the owner of it, whether it was Benjamin Jones, Alomo D. Jones, or Mr. Shove; that when he made the offer to buy the twenty acres, he thought the property belonged to Mr. Jones, and that he did not know that it belonged to Shove; that when he was spoken to by Shove to buy the land, he went to the register’s office to have the title examined, and the register told him it was all right, that'Mr. Shove would give him a warranty deed, and that Shove owned the land; that he knew nothing about the contracts between Shove and Jones; that he believed Shove’s word and Eranz’s [the register’s] word.” The defendant testified that when the plaintiff came to buy the twenty acres, “ I told him I could not sell for that price, and plaintiff said he was talking with Shove, and I stated to him. I had a claim to the
The learned counsel for the plaintiff insists that this evidence was insufficient to justify a jury in finding that the plaintiff had actual notice of the rights of Jones, within the meaning of the statute, and therefore the court was right in refusing to submit that question to the jury. "We do not agree with the learned counsel, and are of opinion that the learned circuit judge erred in refusing to submit .this question to the jury. The actual notice required by the statute is not synonymous with actual knowledge. None of the cases, not even those cited from Massachusetts, hold that, in order to charge the purchaser with actual notice, it must be shown that he had actual knowledge of the precise claim of the person holding the unrecorded defeasance. "We think the true rule is, that notice must be held to be actual when the subsequent purchaser has actual knowledge of such facts as would “ put a prudent man upon inquiry, which, if prosecuted with ordinary diligence, would lead to actual notice of the right or title in conflict with that which he is about to purchase.” Where the subsequent purchaser has knowledge of such facts, it becomes his duty to make, inquiry, and he is guilty of bad faith if he neglects to do so, and consequently he will be charged with the actual notice he would have received if he had made the inquiry.
We are aware that this construction of the statute is in conflict with the later decisions of the supreme courts of Massachusetts and Indiana, and with the definition given to the term “ actual notice ” by Bouvier in his Law Die., 236, and by Story in his Eq. Jur., § 399. Parker v. Osgood, 3 Allen, 487; Dooley v. Wolcott, 4 id., 406; Sibley v. Leffingwell, 8 id., 584; White v. Foster, 102 Mass., 375; Lamb v. Pierce, 113 id., 72; Crassen v. Swoveland, 22 Ind., 428-434.. In 113
We can see no good reason why a person who has taken a defeasance in writing which makes an absolute deed a mortgage, should stand in a worse position than the man who makes an absolute deed, which, by a purely parol agreement, is proved to be a mortgage; yet in such case, as the section referred to does not and cannot apply, the right of the party claiming the estate againsran absolute deed by a defeasance of a less degree of dignity in the law, would be protected against a'subsequent grantee, upon pi’oof of notice of his rights; and in that case, there being no statute on the subject, proof of knowledge of such facts as would put a prudent man upon inquiry, and render it fraudulent for him to purchase without making inquiry, would be sufficient. Nor do we see why a purchaser from a person holding an estate in trust, in fact, but which is not disclosed by the record, should be less protected in his purchase than the man who purchases as the plaintiff purchased in this case; and yet the statute in that case provides that if he purchase with “notice” — not “actual notice,”— he shall not be protected. Sec. 20, ch. 84, R. S. 1858.
The construction we are inclined to give to this statute, is abundantly sustained by authority. The supreme courts of Iowa, Missouri, Oregon and Maine, in which the law as to notice is the same as in' Massachusetts, hold to the rule adopted by us in this case, and do not follow the strict construction given to the law in Massachusetts. Musgrove v. Bonser, 5 Oregon, 313; Wilson v. Miller & Beeson, 16 Iowa, 111. In this case, the court say: “We are thoroughly satisfied that Beeson either had actual and positive knowledge of the plaintiff’s rights, or, what is the same thing in law, that he designedly abstained froin making inquiries of Wilson for the purpose of avoiding knowledge.” In Maupin v. Emmons, 47 Mo., 304-6, the court say: “The actual notice required by the statute is used in contradistinction to the constructive notice given by the record. It does not mean that there must. necessarily be direct and positive evidence that the subsequent purchaser knew of the existence of the deed. Any proper evidence tending to show it, facts and circumstances coming to hi£ knowledge that would put a man of ordinary circumspection upon inquiry, should go to the jury as evidence of such notice.” In Speck v. Riggin, 40 Mo., 405, the court holds that, “ notice is actual when the purchaser either knows of the existence of the adverse claim of title, or is conscious of having the means of knowledge, although he may not use them.” In Vaughn v. Tracy, 22 Mo., 417, and 25 Mo., 318,
The following cases support the rule adopted by us, but they are not all under statutes which require actual notice: Warren v. Sweet, 31 N. Y., 332; Price v. McDonald, 1 Md., 403; Hastings v. Cutler, 24 N. H., 481; Whitebread v. Jordan, 1 Younge & Coll., 303; Mankinson v. Barbour, 29 Ill., 80; Jordan v. Pollock, 14 Ga., 157; Lewis v. Bradford, 10 Watts, 67; Fisk v. Potter, 2 Keyes, 70; Sergeant v. Ingersoll, 7 Pa. St., 340; 15 id., 343; Parke v. Chadwick, 8 W. & S., 96; Blaisdell v. Stevens, 16 Vt., 179; Hubbard v. Smith, 2 Mich., 207; Morrison v. March, 4 Minn., 422; Groff v. Ramsey, 19 id., 44; Buck v. Holloway, 2 J. J. Marsh, 163-180; Daniels v. Davison, 16 Ves., 249. The earlier decisions in Massachusetts did not take the ground that there must be actual knowledge of the existence of the unrecorded deed. Curtis v. Mundy, 3 Met., 405. In New v. Farrell, decided March 9, 1878, in supreme court of Minnnesota (N. W. Rep., vol. 2, p. 203), the court hold that possession of the grantor who had given an absolute deed to secure a debt, which was therefore a mortgage, was notice to a subsequent purchaser from the grantee named in such deed, of the equitable rights of such grantor, the proof showing that such subsequent purchaser had actual notice of such possession at the time of his purchase.
This court has repeatedly decided that possession of a party claiming under an unrecorded deed was sufficient notice of his equities to a subsequent purchaser, even though such occupation was unknown to the purchaser. Wicke v. Lake, 21 Wis., 410; Ehle v. Brown, 31 id., 405; Warner v. Fountain, 28 id., 405; Wickes v. Lake, 25 id., 71. Actual knowledge of the record of a deed which is not entitled to record because not properly witnessed, is sufficient notice to a subsequent pur
. It is insisted that the possession of Jones after the execution and recording of his deed, though known to the plaintiff, was no notice that he had or claimed any title to the land in hostility to his deed.
The authorities cited by counsel for the respondent would seem to countenance the proposition stated; but the statement made by the courts in the cases cited, that the possession of a grantor cannot be considered hostile to the rights of his grantee, are very broad and general, and are not supported by argument. We are of the opinion that the rule as stated in these cases must be qualified by at least two considerations: first, that such occupation is not inconsistent with the rights of the grantee; and second, that the length of time that the occupancy has continued ought to be considered. The first consideration is recognized by the authorities. Butler v. Phelps, 17 Wend., 642; Cramer v. Benton, 4 Lans., 291; Chalfin v. Malone, 9 B. Monroe, 496. And in the case of Hoyt v. Jones, 31 Wis., 389, Justice Cole, who delivered the opinion of the court on the first argument, not published, recognizes the fact that the grantor might hold adversely to the title of his grantee; and, although a reargument was granted in the case, it was admitted by the counsel for the appellant that there was no doubt that the grantor might hold the posses
The evidence in this case shows that the grantor and grantee lived in the same city, and within a very short distance of the lands in controversy; that the grantee was a banker, whose business is to loan money; that the grantor, Tones, had occupied the lands for many years previous to the giving of the deed in 1870, and continued to accupy the same in the same manner after the deed was given, down to and at the time the plaintiff purchased, more than six years after; that during all that time the farm continued to be known as the Jones farm, and no claim to the possession thereof had ever been made by the grantee in the Jones deed; that these facts were all known to the plaintiff before his purchase; and that, shortly before he bought of Shove, he applied to Jones to purchase the lands; and, for the purpose of this appeal, it must be held that he was then informed that Jones claimed to have an interest in the land. We are of the opinion that, with these facts in evidence, it was clearly a question for the jury, whether the plaintiff had notice that Jones claimed an interest in the lands hostile to the title of his grantor, Shove; and whether a man of ordinary prudence, with that knowledge, could afterwards, in good faith, purchase the lands of Shove, upon his mere declaration that he owned the land in fee, and the knowledge of the record of the deed in his favor. It was not sufficient to make inquiry of the person claiming in hostility to Jones, and to search the records. His inquiries should have been made of the person claiming in hostility to the recorded deed, and who held the possession. And, as this person lived in the same city with the plaintiff, it is some evidence of bad faith on his part that he made the purchase without such inquiry. Shotwell v. Harrison, 30 Mich., 179; Wade on the Law of Notice, § 270. We are of the opinion that the learned circuit judge should have submitted the case
In the case of New v. Farrell, sufra, the supreme court of Minnesota held that the possession of the grantor, though of but a very short continuance after his deed, was notice, to a person who had actual knowledge of such possession, that the grantor claimed in hostility to the deed, and that, as against suclf^mrchaser, the grantor might show that ■ the deed was given as a mortgage. In that case, however, the defeasance was purely a parol one, and did not exist in writing; it was not, therefore, within the section which, in that state as well as in this, requires actual notice when there is a written de-feasance which is not recorded. This case has gone further in charging notice upon a subsequent purchaser than this court would be willing 'to sanction in a case like the one at bar. "We think, however, that when the first deed is to a per'son whose business is loaning money, and no change of possession takes place, and the grantor remains in as before, controlling the lands as his own without any interference on the part of the grantee' for a series of years, these facts are strongly suggestive that the deed is given to secure a loan of money, rather than an absolute conveyance of the fee.
The fact that the evidence shows that it was A. F. Jones, the son of the grantor, who had the conversation about selling the land to the plaintiff, and that, in warning him not to buy of Shove, he said he had a claim on the land, and did not state that his father had any claim, and the fact that on the trial it appeared that at that time A. D. Jones had no interest in the land, do not destroy the effect of the evidence so as to justify the court in entirely disregarding the same. The evidence
The objection that the defense was insufficiently pleaded is without force in this state. This court held in Kent v. Agard, supra, that when the proof in an action of ejectment shows that the plaintiff’s title is in fact a mortgage, his suit must fail. The fact that his interest in the premises sought to be recorded is only a mortgage interest, is fatal to the action.
By the Oowrt. — The judgment of the circuit court is reversed, and a new trial awarded.