95 Va. 294 | Va. | 1897
Lead Opinion
delivered the opinion of the court.
This controversy originates in a bill filed by the Roanoke Savings Bank against Evans Bros., the Covenant Building & Loan Association, Lizzie Reed, C. A. Myers, and others.
The facts, as they appear in the record, are as follows: O. A. Myers was the owner of a lot in the city of Roanoke fronting 30 feet on Rutherford street and running back 200 feet to Walker street, with a front on the latter street of 60 feet. Upon the Rutherford street front, running back 100 feet, there was a ■ deed of trust from Lizzie Reed to Cocke and Shields, trustees, to secure the Old Dominion Building & Loan Association the payment of $1,000. This deed was acknowledged and admitted to record October 3, 1892, and constitutes the first lien upon
This case is very similar in its facts, and is identical in principle, with that of Williams v. Jackson, decided by the' Supreme Court of the United States, and reported in' 107 U. S., at page 478, where Justice Gray, delivering the opinion of .the court, uses the following language:
“Williams is admitted to'have had no actual knowledge that the notes secured by the first trust deed were held by the plaintiffs, or that they were unpaid. The knowledge of those facts by Charles T. Davis, through whom Williams made the loan,
“Williams took every reasonable precaution that could have been expected of a prudent man, before advancing his money to Charles T. Davis for Sweet and wife. He declined to lend his. money until after he had been furnished with a conveyancer’sabstract of title, showing that the deed of release from the trustees under the first deed of trust, and from the original holder of the notes secured thereby, as well as the second deed of trust to secure the repayment of the money lent Williams, had been recorded, and that the land was not subject to any incumbranceprior to the second deed of trust.
“it was suggested in argument that, as the first deed of trust, showed that the notes secured thereby were negotiable, and were not yet payable, and that the land was not intended to be released from this trust until all the notes were paid, Williams was negligent in not making further inquiry into the fact whether they were still unpaid. But of whom should he .have made inquiry? The trustees under the first deed, and the original holder of the notes secured thereby, having expressly ■ asserted under their own hands and seals that the notes had been paid, and Sweet and wife having apparently concurred in the assertion by accepting the deed of release, and putting it on record, he certainly was not bound to inquire of any of them as to the truth of that fact; and there was no other person to whom, he could apply for information, for he did not know that the notes had ever been negotiated, and he had no reason to suppose that they had not been cancelled and destroyed.
“To charge Williams with constructive notice of the fact that the notes had not been paid, in the absence of any proof of knowledge, fraud, or gross or wilful negligence on his part, would be inconsistent with the purpose of the registry laws, with the settled principles of equity, and with the convenient, transaction of business.
Mrs. Reed desired also to make this property the basis of a credit with Evans Bros., merchants of the city of Roanoke, and they paid to her, or extended credit to her, to the sum of $600, and took a deed of trust to secure it upon the property fronting on Rutherford street. As we have seen, there was a deed of trust upon this front in favor of the Old Dominion Building & Loan Association for $1,000, which constituted the first lien; a second lien to secure the two notes of which the Roanoke Savings Bank was the indorsee; and in this condition of the title Evans Bros, paid to Lizzie Reed, or extended credit to her for, the sum of $469 — a part of the sum of $600, now claimed by them. At the time the $469 was paid, the lien in favor of the Roanoke Savings Bank appeared of record in full force and effect. At that point Evans Bros, declined to extend further credit or make further payments until the lien now claimed by the Roanoke Savings Bank should be discharged and released. C. A. Myers then entered of record upon the deed book as in the case of the Covenant Building & Loan Association, the satisfaction and release of the incumbrance of which she was the apparent owner, and thereupon Evans Bros, paid over to Lizzie Reed $131, which, together with the $469, made up the aggregate sum of $600. At the time the $469 was paid, the deed to secure the notes to C. A. Myers, which had been by her transferred to the Roanoke Savings Bank, was in full force and effect. It is not suggested that Evans Bros, had received any assurance that it had been “satisfied,” as in point of fact it had not been, but the money was paid by Evans Bros., or credit extended by them to Mrs. Reed, to the extent of $469, with the record showing the liens outstanding, as they have been heretofore stated.
There is room for grave question whether they can be so considered with respect to the $131, under the circumstances of this case; but that point it is not necessary for us to decide.
When C. A. Myers entered “satisfaction” of the deed of trust to secure the two notes for $400, of which, so far as was disclosed by the record, she was the owner, it operated as a release of that incumbrance, but did not have the effect, as in the case of the Covenant Building & Loan Association, of putting the legal title in the trustee in the deed made for the benefit of Evans Bros., because upon this particular piece of property the legal title was outstanding in Cocke & Shields, trustees, to secure the Old Dominion Building & Loan Association, which, as we have seen, constitutes the first lien on the Rutherford street property. With respect, therefore, to the $131, Evans Bros, were the purchasers of a mere equity, and they may be said to have an equity equal to that of the Roanoke Savings Bank. If Evans Bros, had acquired the legal title, or, rather, had the legal title, by these transactions, been vested in a trustee for their benefit, they would have an equal equity, and the legal title would have prevailed; but as the case actually stands they are the holders of an equal, but a junior, equity, and must be postponed to the older equity of the Roanoke Savings Bank. See the citation already made from Williams v. Jackson, supra, and also Briscoe v. Ashby, 24 Grat. 454, where it is said, quoting from Chew v. Barnet, 11 Serg. & R. 389: “When it is asserted that a purchaser for valuable consideration takes the title free of every trust or equity of which he has no notice, it is intended of a title perfect on its face, for every purchaser of an imperfect title takes it with all its imperfection on its head. It is his own fault that he confides in a title which appears defective to his own eyes, and he does so at his peril. Row, every equitable title is incomplete on its face. It is, in truth, nothing
We are of opinion, therefore, that the decree of the Corporation Court of Roanoke is erroneous in so far as it postpones the lien of the Covenant Building & Loan Association to that of the Roanoke Savings Bank, and to that extent it must be reversed, but that there is no error in the decree to the prejudice of the appellants Evans Bros., and it is, as to them, affirmed.
We are also of opinion that C. A. Myers and Lizzie Reed, having perpetrated a fraud upon the Roanoke Savings Bank, are responsible to it for any loss it may have sustained, and that the court, having them now before it, should proceed to do full justice in the premises; and the cause will be remanded to the Corporation Court of Roanoke with directions to decree in favor of the Roanoke Savings Bank against O. A. Myers and Lizzie Reed for whatever sum may appear to be necessary to indemnify it against loss by reason of the fraud perpetrated upon it.
Dissenting Opinion
(dissenting).
We concur in the conclusion reached by the court that the Covenant Building & Loan Association was an innocent purchaser for value, unaffected by the fact that the notes held by the Roanoke Savings Bank were outstanding and unpaid at the time the deed securing them was released of record.
We further concur in the view taken that Evans Bros., having paid over to Mrs. Reed $469 under their deed of trust while the prior deed securing the Roanoke Savings Bank stood unreleased, are, to the extent of that $469, subsequent m priority to the lien of said bank.
The question is not one of balancing equities between the parties, nor is it, in our view, material that the legal title to the land was outstanding in the trustee in a deed of trust prior to that released. The necessary effect of the statute was, when the deed of trust securing the notes held by the bank was released, that the title to the land was clear so far as that incumbrance was concerned, and bona fide rights therein subsequently acquired could no longer be affected thereby.
The object of registry acts is to enable any person about to deal with reference to any parcel of land to discover, or find the means of discovering, every existing and outstanding estate, title, interest in, or incumbrance upon the lands which could affect the rights of a bona fide purchaser. 2 Pom, Eq. Jur. sec. 649. And when such a purchaser has gone to the record, and seen that a recorded incumbrance upon the land has been released in the manner prescribed by statute, and, upon the faith of that release, has made his purchase, and paid the consideration, we are of opinion that he takes the land free from that incumbrance, without regard to the question whether the estate which he acquires is legal or equitable.
Reversed in part.
