32 Conn. 250 | Conn. | 1864
This is a bill for the foreclosure of mortgaged premises. The petitioners are bona fide holders of a note originally secured by the mortgage in question, and the respondent Savage is the bona fide purchaser of the mortgaged property, and the state of Connecticut, which is also made a respondent, is the mortgagee of Savage. Neither of the respondents had any notice that the property was incumbered at the time of taking their conveyances, and the title appeared by the land records to be in Mandeville, from whom the respondent Savage purchased. Thus far the equities of the parties would seem to be balanced. The note, with other notes made at the same time, was executed by John R. Parker for the purchase money of the mortgaged property ; they were payable to Mandeville or order, he being the person of whom this purchase was made; and the mortgage in question was executed by Parker to him to secure their payment. Shortly after this transaction Mandeville transferred the notes with the mortgage to one Brigham, who subsequently transferred the note now held by the petitioners to them. There was no assignment by deed of any interest in the mortgaged property,' either to Brigham or the petitioners, and an examination of the land records, therefore, would have furnished no information on the subject of their being holders of the notes, or having any interest in the mortgaged property. After Mandeville had parted with the notes, Parker, in December, 1858, quitclaimed his equity of redemption to him, and in the
The regular record title is therefore in the respondents, and they, through the respondent Savage, as we suppose, are in possession. On this short view of the case it would seem that the well established equitable principle, that where the equities are balanced the title at law will prevail, would determine the case in the respondents’ favor. But it is claimed that the equities are not equal, because, it is said, the respondent Savage, at the time of his purchase, could have discovered by the record that the property had been mortgaged to secure certain negotiable notes which were not yet due, and might therefore be presumed to be outstanding in the hands of some one, and that it was his duty to protect himself by inquiry before he took his conveyance, and it was laches in him not to inquire. Savage it would seem did know that Mandeville had formerly sold the same property to Parker, and probably knew that Parker had mortgaged it back to secure the purchase money,'and this appeared by the record. It is clear, therefore, that the person most likely to know what had become of the notes was Mandeville, and it appears from the answer, which .is admitted to be true, that Savage did inquire of him if the premises were clear from incumbrance, and Mandeville informed him that they were, and he also informed him that Parker was unable to perform his undertaking for the payment for the premises, and that therefore he had taken back the property and released him from his obligations. In substance this was informing Savage that the notes had been given up or canceled, since in no other, mode could they be effectually released so as to prevent their transfer to a bona fide holder. Now if Mandeville meant to mislead Savage' by giving him this information in such a form as to be literally true, and yet to convey a false impression that Parker’s notes were no longer in existence, and he suppressed the fact that the notes had then been negotiated to bona .fide holders for value, it shows, we think, that any further examination of him would probably have elicited, very little additional information. If Savage was bound therefore to make reasonable inquiry as to whether
But we by no means intend to be understood as holding that he was bound to make the inquiry that it appears he did make. The record title to the property appeared to be in his grantor, Mandeville. He too was the only person at all likely to know whether there was any incumbrance that did not appear upon the record. If he would convey property that he knew was incumbered by a mortgage without disclosing the fact to his grantee, he would not probably be a very reliable person of whom to inquire whether in so doing he was committing a fraud; and such . an inquiry could hardly be required or expected to be made if the grantor was in fact incapable of such an act. We think therefore Savage was justified in relying upon the record, and upon the assurances made to him in his deed, which ought to be as reliable as any parol assurances that could be given. Besides, in disposing of this question of laches, for the purpose of discovering who has the strongest equity, we are inclined to think that the omission of Brigham and of the petitioners at the time the notes were transferred to them respectively, to take deeds of assignment of the mortgaged property, was as great laches, to say the least, as the negligence of Savage in not making inquiry. They could have protected their interests by deeds which would have placed it beyond the power of Mandeville to commit a fraud, and if they relied at all upon the mortgage security we think their only safe course was to do so. Whether the petitioners relied at all upon the mortgage does not appear,.or even that, they knew of its existence at the time the notes were assigned to them. They might have relied entirely upon the personal security of the parties to the
The negotiability of the notes has been somewhat relied upon as making the petitioners’ case stronger than it would ’ otherwise be, but we think this circumstance does not vary the equities of the case. All choses in action are assignable in equity, and the assignee’s rights will be protected to such • securities, as well as to such as are negotiable at law. We think then that the respondents’ case may fairly rest upon the equitable maxim that where there is equal equity the law will prevail. This is the ground upon which courts ordinarily refuse to interfere against a bona fide purchaser, for a valuable consideration, of a legal estate, without notice of any adverse claim or incumbrance, and this maxim is, in cases of this sort, entitled to peculiar force with us under a recording system founded upon the policy of having the true state of every title to real estate appear upon our records. This policy, remarks Williams, C. J., in North v. Belden, 13 Conn., 380, “ has added greatly to the security of our land titles and has prevented much litigation which would otherwise have arisen ; and our courts have ever considered it their duty to give such a construction to our statutes as will continue this salutary protection.” The petitioners’ claim is the creature of equity. The assignment to them of the notes was in equity a transfer to them of the mortgage given to secure them. But if they had at the time taken a new mortgage to themselves directly to secure the notes, it would have been utterly useless as a security unless they had caused it to be recorded ; and is it so that a mere equitable transfer, not evidenced by any writing whatever, and of which the land records give no notice, is to have an operation which would not be given to a regularly executed deed? This court, in Orvis v. Newell, 17 Conn., 97, held that an intervening incumbrance, implied by equity, but of whicli a subsequent mortgagee had no notice, was of no validity against such mortgagee, and yet the equitable claim in that case appears to have been as strong as that of the petitioners in this. The case of The Quinebaug Bank v. French,
The advantage which the holder of the legal title obtajns against others having the same equitable interest is very well illustrated by the case of Osgood v. The Thompson Bank, 30 Conn., 27. In that case there were several notes secured by the same conveyance of the legal title to land, and these notes were subsequently assigned to different persons, with an assurance to each assignee, made at the time of each assignment, that the note assigned was so secured ; still, this court held that one of these assignees, having procured a conveyance of this legal title to himself and having no notice at the time of the other notes similarly secured, was authorized to hold the land or the avails of it as a security for the payment in full of his note, to the exclusion of the others having claims secured by the same conveyance. There is also a case in 22d Texas Rep., 464, which seems to be almost identical with the case under consideration. It is the case of Henderson v. Pilgrim, in which it was held that under their statute an assignment of a mortgage should be recorded as an agreement relating to land, and, if it was recorded, a bona fide purchaser of the mortgagor, who at the time receives a release and discharge from the mortgagee, holds clear of the mortgage notwithstanding a previous assignment of which he had no notice ; and the case is put upon the ground that the assignee of the debt and mortgage has but an equitable estate that can not be preferred to that of the releasee without notice. And why should it not be so ? The assignee of the debt, by omitting to take a conveyance of the land and ' causing it to be recorded, has put it in the power of the original parties to the mortgage, by uniting the mortgage title with the equity of redemption, to commit a fraud upon an innocent purchaser. And of the two innocent parties, one of whom must suffer, it would seem
In this opinion the other judges concurred.