Loughridge v. Bowland

52 Miss. 546 | Miss. | 1876

Simball, C. J.,

delivered the opinion of the court.

The decision of this case depends on the solution of these questions :

1. Was the sale and conveyance by J. N. Chears to Lough-ridge & Bogan anterior to the'levy of Bowland’s attachment, and did the latter, have notice of it ?

2. Was the conveyance bona fide, or fraudulent as to creditors of Chears?

3. Was Bowland a creditor of Chears at the date of the conveyance ?

The deed purports to have been dated the 7th of February, 1866. Not having been acknowledged or proved, as required by law, the filing of it for record on the 12th of March, 1866, under the imperfect and insufficient proof by the subscribing witness, did not impart to the instrument and those claiming' under it the benefits of notice to creditors and purchasers.

Bowland’s attachment was levied on the land early in March, 1866. The improvident filing of the deed on the 12tlrof April in the probate clerk’s office, and its actual registration on the ■17th of that month, did not impart notice to creditors.

The appellee, Bowland, insists that the deed was not executed until about the 12th or middle of April; but that it was antedated, as of 7th February, so as to give it an earlier date than the levy of the attachment.

Loughridge and Bogan, in Their testimony, fix the execution of the deed at its date, and the place, their storehouse at Birmingham, Pontotoc county. We think that the weight of the •testimony clearly proves that the conveyance was made on the ■day of its date.

Did Bowlaud have actual notice of the sale before the levy •of his attachment?

If Loughridge & Bogan had. openly taken and held possession, or if there had been a change of occupants so as to have arrested notice and attention, then they might invoke the principle laid down in Doe ex dem. v. Lacoste, 1 S. & M., and The subsequent cases.

Possession bj' the vendee under an unrecorded deed is notice To creditors. Possession is a badge of ownership and evidence <of a right. If the debtor has parted with the possession, a -creditor is interested to know the nature and extent of the right, and is therefore put upon inquiry and is esteemed to '.know the truth to which investigation would lead.

But, that possession may have the effect of protecting the ■title under which it is held, it must be of that character which ••would arrest attention. The ceremony of livery of seizin was .performed openly, in the presence of the freeholders, for the ;purpose of attesting the act. Eegistration was adopted as a ¡substitute, for the purpose of conclusively imparting notice.

Shortly after the passage of the registration law in England The courts held, as within its reason and intendment, that •whatever communicated information to a creditor or purchaser _ ■of a prior conveyance bound his conscience and accomplished what the law designed.' Possession was laid hold of as a cir-■oumstauce from which notice may be inferredbut, like other inferences, it depends for its force on tbe nature of the fact from which it is deduced. The reason which underlies the' doctrine is that it is a fraud — an act of mala fides — for a. creditor or purchaser who had knowledge of a prior sale and purchase to attempt to defeat the purchaser's right by getting-his estate.

Whenever it is sought to establish notice inferentially, the ■ facts proved ought to be emphatic and distinct. Hence the observation of’the court in Norcross v. Ridley, 2 Mass., 605 : “Where a prior conveyance is attempted to be supported by fraud in the second purchaser, the fraud must be clearly proved.” Meechen v. Griffing, 3 Pick., 154; Jackson v. Sharp, 9 Johns., 190 ; Day v. Dunham, 2 Johns. Ch., 190; Jones v. Lygins, 37 Miss., 546.

There was no change in the occupancy of the land. At the time of the sale Chears was in possession, by his tenants. After the sale the same tenants continued to hold, on an agreement to pay rents, to Loughridge & Bogan. Nothing-more occurred than a technical attornment of the tenants to them. There was a transfer of the title, but no change of possession that a stranger could observe. The actual occupancy in March and April, after the sale, was just as it had been the prior months of the year. In all this there was nothing to-arrest notice or to put a creditor or purchaser on inquiry.

Did Bowland have actual notice ? In the answer he says he had no knowledge of the deed until he had attached the land. Some witnesses speak of a rumor of the sale in the neigh- • borhood; but when started, whether before or after the-attachment was served, was not proved.

There was less than a month for the rumor to have become ■ current, between the' execution of the deed and levy of the attachment. He admits that he heard the rumor, but denies, information or knowledge until the April term, about the 12th or 15th of the month. The creditor, or subsequent purchaser,, must be so bound in conscience, by notice, as that mala fides-could be imputed to him if he should take the estate against. tbe prior vendee. In Jackson v. Given, 8 Johns., 139, the effort was to charge the subsequent purchaser upon stronger evidence of report or rumor than in this case. Williams, the junior purchaser, had recorded his deed first, but the testimony was, “that he had understood that Humphrey had fooled away the lot and had sold it several times ; he did not consider it worth his trouble to look after it.”

KENT, C. J., said : “ This conversation, unaccompanied with other circumstances, is too loose to justify the inference of notice.” Mere suspicion is not enough to break in on the registry act. Hine v. Dodd, 2 Atk., 275 ; Jolland v. Stainbridge, 3 Ves., 478. The notice must come from some responsible person; a mere floating rumor, by irresponsible persons, may be disregarded. Waites v. Cooper, 24 Miss., 228. Whatever puts a party on inquiry amounts in judgment of law to notice, provided inquiry be a duty (as in case of a purchaser or creditor), and would lead to a knowledge of the-requisite fact by the exercise of ordinary diligence. Maul v. Rider, 7 Watts, 267. But, as ruled in Maul v. Rider, 59 Penn. St., 172, general rumor does not impose the duty of inquiry. Knowledge of such rumor is neither actual nor implied notice; investigation into its truth is not a duty. “ There must besóme declaration from an authentic source, which it would be negligence to disregard, to put a party on inquiry.” The only- notice brought home to Bow-land, earlier than April, is of the character discussed in these cases, and declared to be insufficient. We think the doctrine is sound. -

The testimony fails to establish express or implied notice to Bowland before he attached. Bowland impeached that conveyance because it does not, as he alleges, rest upon a valuable consideration; but the testimony is, that the sale was made in satisfaction of Chears’ debt to Loughridge & Bogan; and upon the further ground that it was intended to operate as a-mortgage, or that there was some benefit in secret trust to the grantor, and some statements or admissions of Chears were put in evidence — as that lie made tbe conveyance to defeat Billingsly.

But quite all of these declarations were after his deed to the complainants, and are not competent evidence against his ven-dees. The same observation applies to other statements, such •as that the sale was a sham, and of his right .to taire back the property.

But it is argued for the appellees that Bowland was not a creditor of Chears at the date of the sale to them, and therefore they have an older and superior equity to him.

Bowland was the surety of Chears on a note made in 1861, and held by Mrs. Maxwell, the executrix of one Collins, the payee. About the 1st of March, 1866, he took up this note, partly with cash, and by giving.his own note with surety for the balance.

Whether the surety is esteemed the creditor of his principal •from the date of his suretyship, or the date of payment of the debt, depends very much on the character of the remedy or redress which he may seek.

Undoubtedly for all purposes he is a creditor from the time of payment. At that moment a cause of action for.reimbursement becomes complete by action at law or in equity, for substitution to the securities held by the original creditors. Lee v. Griffin, 31 Miss., 638 ; Starke v. Lewis, 10 S. & M., 120; 37 Miss., 452. Against which the statute of limitations begins to run from the day of judgment. 48 Miss., 140.

But for some purposes the surety is the creditor of his principal from the time he incurred the obligation for him. Under the statute of frauds and perjuries (13 Eliz., ch. 5), •and the American statutes framed on that original, a very broad latitude has been indulged in determining who are •creditors, and, as such, may be injured by a fraudulent conveyance or other covinous act. An accommodation indorser -and suretjr are treated as creditors from the time they indorsed •or signed the note, and may set aside a fraudulent conveyance •executed by the principal after becoming so liable, and before payment of the debt. Pennington v. Seal, 49 Miss., 525, and cases cited. If the deed to Loughridge & Bogan had been' contrived of covin and fraud meditated against creditors, we ■ would be well warranted in holding that Bowland was a creditor of Chears, although he took up the note after the ■ sale. Pennington v. Seal, 49 Miss., 525.

The doctrine is manifestly just. Cogent reasons might be urged, if it became necessary, for the application of the same doctrine under the registry statute. That statute makes void, as to creditors and subsequent purchasers, all secret sales and cónveyances of lands. If the deed is not recorded, and the creditor does not otherwise have notice, as to him it is utterly void. The argument of counsel implies that if Mrs. Max-, well, on the facts in the record, had attached the land, she must have prevailed, because she did not have actual-notice, nor was the deed recorded, because she was an existing-creditor at the date of the sale.

When Bowland became bound as surety there sprang up at. once the contingent liability to him, on the part of Chears, that if he paid the debt then Chears would indemnify or reimburse. The contingent undertaking became absolute on the act of payment, but it existed all along. Upon that theory of' responsibility the courts have determined that a surety was a creditor of the principal, within the statute of frauds, from the moment he engages for him. The “act in relation to principal and sureties” (Code, 1857, pp. 362, 363) gives full and distinct expression to. that idea (ib., §§ 2257-2261, Code, 1871), especially art. 3 of the former Code (§ 2259 of' the latter), which provides that when the surety “ shall pay” or tender what money or other thing is due by any writing, such £ ‘ creditor ” or “ holder ’ ’ shall assign such writing to the ■ surety or indorser, and such assignee shall have an action in. his own name against the principal debtor on the writing. That is, the note, or bond, or other writing — the memorandum of the debt — shall not be extinguished, but shall continue in-force against the principal debtor for the surety or assignee.. If, therefore, it were necessary to decide the question whether Bowland sustained to Cheats the relation of creditor and debtor at the date of the convej'ance, there is much force in the suggestion that he should be esteemed as having that character from the date of his original obligation. On that point, however, we advance no opinion. The registry act declares all deeds unrecorded void as to all creditors without notice. Code, § 2304. The statute is broad and sweeping, making no exception in favor of those that are bona fide and for valuable consideration. Like a tyrant, the statute denounces voidness of “all bargains and sales, and all other conveyances whatever, of lands * * * as to creditors * *' * Avithout notice, unless recorded,” etc. But the statute has been construed to mean creditors Avho have obtained a specific right against the property, such as a lien by attachment and judgment.

Before the creditor can object to the conveyance he must have a right to proceed against the specific land for satisfaction of his debt. That right is secured by seizure under attachment or judgment, both of Avhich are liens.

It has been uniformly held in this state that the creditor must have notice of the unrecorded deed before he acquires a . lien by the service of an attachment or recovery of judgment. The service of the attachment is the seizure of the thing by the officer of the law, so that the judgment and sale relates back to the levy, and the purchaser’s title takes effect from that date. Mandeville v. McLure, 14 S. & M., 11; Redus v. Wofford, 4 ib., 579; Gray v. Perkins, ib., 622 ; 43 Miss., 583; 24 ib., 106; Harper v. Tapley, 35 ib., 506; Taylor v. Lowenstein, 50 ib., 281.

The same construction has been placed on a similar statute in other states. Stanly v. Perley et al., 5 Me., 373; Coffin v. Ray, 1 Metc., 214. In the case last cited, and Priest v. Rice, 1 Pick., 164, the court regard the attachment of land as in the nature of a purchase, and the attaching creditor affected with notice of a prior conveyance in the same manner as a purchaser. Notice to a purchaser after he has obtained the title is too late and does not bind his copscien'ce.

Bowland obtained his lien before, as we have seen, he had notice of the sale and conveyance to Loughridge & Bogan.

The statute may receive this paraphrase : A purchaser must record his deed at his peril, for if he does not it .shall be void as to that creditor of the vendor who acquires a lien on the property before he gets notice of the sale. Within the meaning of the words, as construed by the courts, the creditor has •established his right to satisfaction of his' debt out of the property if he has obtained a lien before he receives notice of the conveyance.

The statute does not say toticlem .verbis that the debt must have had an existence at and before the date of the sale. To hold that such is the intendment would lead to mischievous •consequences.

. Suppose that Loughridge & Bogan had withheld their deed from record four or five years. Chears might have continued to get credit on the faith of his continued ownership of the property, and it would be very difficult, indeed quite impossible, to point out a superior equity in favor of those who gave credit before the secret sale over those who did so afterwards.

Both may be said to have dealt with him on the faith of the property. What peculiar efficacy can be ascribed to a prior •creditor over a subsequent one, if both are ignorant of the conveyance ? Each acts on the predicate that the apparent is the real condition of things ; each would be loser if the property were not liable. But there would be a wide distinction if •one creditor liad notice and the other had not. With the former, the property would not have been the basis of credit; with the latter, it might have been. But it was said in Priest v. Rice, 1 Pick., 167, “if the conveyance was valid for ivant of registiy, it would be immaterial when the debt accrued.”

There is but one class of creditors who may avoid an unregistered deed — those who have obtained liens without notice ; subsequent notice no, more affects them than it would a purchaser who got the title.before notice. Farnesworth v. Childs, 4 Mass., 641; Brown v. Maine Bank, 11 ib., 158.

It is of no value to inquire into the priorities of the dates of' the several debts, whether contracted before or after the secret sale.

The statute makes void th'e deed as to each one of them: who obtains a lien by judgment or attachment without knowledge of the sale, and for no others.

In Ohio unregistered mortgages are absolutely void as-against purchasers and creditors however formal and full will not give preference to the mortgage. Stanly v. Roberts, 13 Ohio 148.

But it has been held in Alabama, where the statute makes the-unregistered deed void against creditors, without making any exception in cases of notice, that the exception will be inqjlied, and notice before judgment will give a superior equity to the vendee, and defeat the lien. Ohio Life Ins. Co. v. Ledyard, 9 Ala., 436.

There has been no vacillation in this state — that notice before-judgment will prevent the lien, but notice after judgment has: no such effect, whether given to the creditor or purchaser under the judgment. Henderson v. Downing, 29 Miss., 106, and cases before cited.

We conclude, therefore, that, as Bowland had no notice of' the deed when his attachment was levied, notice subsequently obtained did not impair the superior right of his lien, and that he could proceed to sale of the land to pay his debt. Claiborne v. Holmes, 51 Miss., 146, and Humphries v. Merrell (MSS.).

The return on the attachment is irregular, and might have-been quashed on motion, but it is not void when drawn in question collaterally. Saunders v. Life Ins. Co., 43 Miss., 598. Nor would irregular process, or the service of it on Chears, be void. 41 Miss., 361; 43 ib., 503. Nor would irregular publication, or an omission to publish, make void the condemnation of the thing attached. 15 Ohio, 433 ; 10 Wall., 308; Calhoun v. Ware, 34 Miss., 146; Ridley v. Ridley, 24 ib., 655.

Decree affirmed, except so far as to declare tbe deed of Ckears, Lougbridge, and Bogan fraudulent and void.