North v. Belden

13 Conn. 376 | Conn. | 1840

Wimjams, Ch. J.

A variety of facts are stated in the pleadings, which are unimportant in considering the question upon which the case was ultimately decided by the court. That question was, which of the two mortgages, North’s or Peck’s, should take priority. The plaintiff, North, had two mortgages, to secure two different debts. As to one of them there was no doubt: the other was to secure a note of 500 dollars. Peck, having a subsequent mortgage upon the same property, claimed a preference, because North’s deed did not disclose the real nature of the transaction between him and Belden. This note for 500 dollars was given to North, at the time it bore date, to secure him for endorsing and becoming responsible for Belden, for a sum not exceeding 500 dollars, which North agreed to do from time to time, as Belden should request. And since said deed was executed, North has, from time to time, endorsed and become responsible for Belden, to that amount; and has since paid the same ; so that there is due to him on said note the full amount. The court below, notwithstanding, held, that upon this mortgage, North must be postponed to Peck, the second mortgagee ; and to review that decision, this motion was made.

It has ever been the policy of our law, that the title to real estate should appear upon record, that it might be easily and accurately traced. This policy 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. It is true, there has been some diversity of opinion as to the precise extent of this doctrine; and cases will sometimes arise, where there may be a doubt as to its application. One principle seems to be definitely settled, that the real nature of the transaction, so far as it can be disclosed, must appear upon the record, with reasonable certainty; and if the deed does not actually give notice of any condition or other circumstance, which might be important, it should at least point out a track, which the enquirer may pursue to obtain it. Stoughton v. Pasco, 5 Conn. Rep 442. Shepard, v. Shepard, 6 Conn. Rep. 38. Thus, it has been considered as settled, long since, that if an absolute deed is given, with intent to secure a debt, such deed would be void as it respects bona fide creditors, as it does not disclose the real nature of the transaction. It places the parties in a false position as it respects the public. It holds out the grantee as the real owner, when in fact the grantor is, or may be, the owner. It tends to lull the creditors of both parties (as the case may be,) into false security, and to conceal from them the real condition of their debtors.

In the laws of New-York, the same principle is recognized. Dey v. Dunham, 2 Johns. Ch. Rep. 182. James v. Johnson & al. 6 Johns. Ch. Rep. 417. And although the terms of the statute of that state may vary from ours, the same object is kept in view. In this case, had the. note given by Belden to North, been a conditional one, and the security been an absolute deed, there would have been no question as to the result. How, then, is the case altered, by the parties going one step further back? The real character of the transaction is no more manifest in the one case than in the other. The public are subjected to the same delusion ; the subject is not presented in its true light. The grantee is no more the real owner of the property, in the one case than in the other. Why then shall the deed be holden invalid, in the one case, and not in the other? The note and deed have indeed but one object, security for future endorsements; and if the deed, which does not disclose the real state of facts, is void, how is the case altered in principle, if neither the note nor deed disclose that object ? The record neither discloses the real state of the transaction, nor does it give any clue to it.

It is said you may enquire of the parties. But the mode taken, by its very nature, tends to shut up the avenue to en-quiry J Enquiry of the parties would imply an impeachment of their integrity. It is, in effect, asking whether they have, in an important instrument, told the truth. This is an enqui-ry which the law would hardly impose upon a man ; much less can a party, who has placed himself in this situation, complain that such an enquiry has not been made of him.

It is said again, that the plaintiff claims no more than the record shows he was entitled to. Whether in fact he was entitled to that sum, when Peck took his mortgage, we have not particularly examined ; but if the endorsements were then made, we presume the plaintiff had not then paid the notes, and that it was not then known whether he would ever be called upon to do it. Of course, his claim upon the property was of an entirely different character, from that which the record imports.

Again, if this transaction is valid, every similar one must be. Consequently, a person may convey all his estate to a friend, who shall promise, bona fide, to endorse for him ; and those endorsements may fluctuate from time to time, in such a manner that no one can tell the state of the property, except as the parties may choose to disclose it; and thus the real state of the title, instead of appearing upon the record, could only be found in the memory of the parties.

It is said, that when the real transaction is fully disclosed, by putting the actual debt upon the record, the state of the incumbrance, cannot then long be known, as the debt may be reduced, by payments. This is a necessary incident, or at least one in the ordinary course of business, and cannot affect a record originally good, as there is no law directing such payments to be recorded. The party has done all that he was required to do. He disclosed fully the nature of the original transaction ; thus leaving it open for the enquiry which prudent men would naturally make, whether any payments had been made, or not.

But it is not necessary to go much at large into this case, because we consider it settled, by the case of Sanford & al. v. Wheeler, 13 Conn. Rep. 165. There, a note was taken for liabilities of the payee, for which he might never be called upon ; and this note, with another, was secured in one mortgage deed ; and that deed was holden void as to creditors, so far as respects this note. Such a note, then, having been held to be void, in that case, if an absolute deed, given merely as security, is also void, there seems to be no question left in this case.

But the case of Weeden v. Hawes & al. 10 Conn. Rep. 50. is claimed to be an authority for the plaintiff. In that case, as well as in Sanford v. Wheeler, this court held, that where there was no actual fraud, a deed would not, in a court of-equity, be treated as wholly void, although some notes were attempted to be secured by it, which would be legally void as regards creditors. But these cases differ from this, in an important particular. The deed purports to be what in fact it was intended for, a security for these debts. The real nature of the transaction is spread upon the record, leaving the character of the several notes to be enquired into.. But here the note, being an absolute note, and the deed given to secure that note, being absolute, there is nothing to lead to enquiry or to suspicion. If in Weeden v. Hawes, the deed had been an absolute one, and had been holden good as to one of the notes, it might have been an authority for the plaintiff. As it is, we do not think that it can affect this case. And we are of opinion, that there is no error in the judgment rendered by the superior court.

In this opinion the other Judges concurred.

Judgment affirmed.