Burns v. Berry

| Mich. | Nov 29, 1879

Marston, J.

On the 9th day of November, 1872, Edmund Thorp, being the owner in fee of certain premises, executed and delivered to James Burns a mortgage thereon to secure the payment of. a promissory note of even date therewith, given by him to said Burns. This mortgage was not recorded until the 29th day of December, Í876. On the 28th day of May, 1874, Edmund Thorp died intestate, leaving as his heirs at law three sons, Aaron, Aimer and Elbridge. No letters of administration were taken out, and the estate of said deceased has never been administered upon. On the 1st day of March, 1875, Aaron and Elbridge conveyed by quit-claim deed all of said mortgaged premises to their brother Aimer, and on the same day Aimer mortgaged the same premises ' to Aaron to secure the payment of $3643.56, this being Aaron’s share as one of the heirs. This deed and the mortgage were duly recorded the same month, and on the 3d day of May, 1875, Aaron assigned this mortgage to Samuel Berry, the said • assignment having been recorded the same day.

Burns filed his bill to foreclose the mortgage given him, setting forth all the above facts and charging that each of said heirs, and that Berry at the time of taking said assignment, had full notice of his noté and mortgage and of the non-payment thereof.

Berry claims to have purchased in good faith without notice, and to have paid full consideration for the mortgage assigned to him, and the proofs fully sustain him.

It also appears that Edmund Thorp at the time of his decease left personal property sufficient to pay all his debts including this Burns mortgage, but which has since been disposed of, and that he also left unencumbered real estate other than that in question, of sufficient value to pay all his debts. ■

What then are the respective rights of Burns and Berry upon the facts stated?

The heirs could take no other or better title to the real estate than their father had at the time of his decease. They therefore took it subject to the Burns-mortgage, whether they had notice thereof or not, and the conveyances made to each other would in like manner be chargeable, with the payment of the Burns mortgage.

Berry having taken an assignment of the second mortgage, which was first recorded, in good faith for a full consideration actually paid, and without any notice either actual or constructive, that Burns had any claim against these premises, is protected we think under ■ the registry, laws.

Our statute provides that “Every conveyance of real estate within this State, hereafter made, which shall not be recorded as provided in- this chapter, shall be void as against any subsequent purchaser in good faith, and for a valuable consideration, of the same real estate or any portion thereof, whose conveyance shall be first duly recorded.” 2 Comp. L., § 4231. This section applies to mortgages and assignments thereof. Id., §§ 4236, 4237.

The protection which this statute gives to a bona fide purchaser does not proceed upon the theory, and is not made to depend' upon the fact, that the grantor at the time of such conveyance had any interest in the premises whatever, or that any passed from him by his conveyance to such subsequent purchaser. It is not by force of the conveyance, but by the terms of the statute, that such subsequent purchaser acquires title to the premises. His grantor having previously conveyed, has no title left to convey, and could therefore by his deed, unaided by the statute, pass none to any third person. Our registry laws however step in, and for the purpose of protecting an innocent purchaser, give him what he supposed, and from an examination of the records had a right to suppose, he was acquiring by his purchase, and to this extent cut off the previous purchaser who negligently failed to record his conveyance. I am of opinion, therefore, that in this proceeding defendant Berry is protected and that the mortgage of Burns must be treated, as against defendant Berry, as a second or subsequent mortgage.

There is however still .another view to be taken of this case, and which it might be well to notice, so that if possible the rights of each may be fully protected.

The note given to Burns by Edmund Thorp became on his decease a personal debt against his estate. For aught that appears in this case, had the estate been administered upon, this note might have been proven, allowed, and paid out of the personal assets, and for want of sufficient thereof, the real estate, including the premises in question, might under the order of the probate court have been sold for the payment thereof. Burns, as a creditor, might have applied for letters of administration and in this way collected his debt.

The real estate of the deceased descends to his heirs subject to the payment of his debts, and conveyances made by them before the estate is administered upon and the claims paid or barred by the statute of limitations are in like manner subject to the debts of the deceased; and as against the debts proved against the estate our -registry laws afford no protection.. Subsequent purchasers take subject to the right of the administrator to have the same sold for the payment of the debts and the expenses of administration.

So that while our registry laws, under the facts in this case, cut off 'the mortgage lien of the complainant as against Berry’s mortgage, they did not cut off complainant’s right to have the estate of the deceased properly administered upon and the real estate of the deceased sold for the payment of this debt if necessary; and in this way complainant’s claim would take precedence over the Berry mortgage.

The complainant may, in this case, take a decree for a foreclosure and sale of the mortgaged premises, subject to defendant Berry’s mortgage, and’ the decree of the court below will be modified accordingly, with costs to defendant Berry.

The other Justices concurred.