Perkins v. Swank

43 Miss. 349 | Miss. | 1871

Simrall, J.:

On the 29th of November, A. D. 1865, Harper leased a plantation in Tallahatchie county, with the mules, stock, etc., to Swank, for the year 1866, for forty bales of cotton. Special lien was taken on the crop to secure the rent. In August, 1866, Swank proposed to purchase the property. The terms seem to have been agreed upon verbally. About the close of the year, December, the contract was reduced to writing. Swank was to pay $50,000 for the property, $5,000 1st Jan-nary, 1867; $5,000 1st April, 1867, and the balance in three, annual installments. If the payment due 1st January, was not met, the Harpers were at liberty to take any' of the property and sell it. If the note due 1st April, was not met, the vendors could take possession of any of the property sold, or placed on the premises by Swank, and sell to pay the debt; and they were also authorized to work and finish the crop, paying expenses thereof, and also compensation to themselves. Should Swank take up the note due 1st January, there was to be an abatement of ten bales from the forty, for the rent of 1866. If he met the second note, all claim on the mules, stock, etc., to be released, and they to be at Swank’s risk.

On the 13th of February, 1867, Swank made his promissory note for $1,000, at sixty days after date, to Perkins, Livingston & Post, and also executed to them a mortgage on a certain steam saw-mill engine, with appurtenances then on the plantation purchased of the Harpers. And on the -day of April, following, Perkins, Livingston & Post exhibited their bill i in chancery against the Harpers and Swank, to enjoin the former from the further prosecution of an attachment for rent, which had been levied on the mill, engine, and appurtenances, and seeking a foreclosure of their mortgage. The Messrs. Harper claim in their answer : that the mill and engine are fixtures on the plantation agreed to be sold to Swank; that by the terms of the contract, Swank’s possession was to be conditional, liable to be defeated on failure to pay the notes, whereupon they took or retained possession of the land, mill, and engine, and R. W. Harper was in possession the day of the date of the mortgage; admit that the attachment was levied for rent due, of $6,000 ; insist that the mill and engine are fixtures to the freehold, and deny that Swank had any interest which he could mortgage.

It thus appears that the controversy is between the plaintiffs in error as mortgagees, and the Harpers, under the contract of sale to Swank, and their attachment for rent.

Perkins, Livingston & Post, assert that their right is paramount under the mortgage, because their mortgage was recorded in due time, and the equitable lien of the Harpers exists by virtue of their contract with Swank, which never was recorded at all, and that they are entitled to the precedence from the date of the registration.

For the Harpers, it is contended that the doctrine of inno - cent purchaser, or encumbrancer, does not ap ply in favor o f Perkins, Livingston & Post, and therefore they have the elder and superior equity.

The innocent purchaser is the especial favorite of a court of equity, and his title will be carefully protected. He is an innocent purchaser who buys the legal estate and pays the purchase price, without knowledge of an outstanding equity. The purchaser of an equity is bound to take notice of any prior equity. If he takes the legal title without notice of the equity, his conscience being clear, his adversary will be left to his legal remedy. His right is complete by paying the money and taking the deed. Foy v. Parker.^* As the advantages are great; in pleading, the right must be distinctly set forth, that the vendor was seised, and in possession ; the consideration must be stated, and that it was truly paid; notice must be denied down to the delivery of the deed and payment of the money. 3 P. Williams, 2801 8 Wheat., 449; 12 Wheat., 502. The title purchased must be-apparently good and perfect at law. 1 Cranch, 100; 1 Wash. C. C. Rep., 74. The purchaser of an equitable title holds it subject to the equities upon it in hands of the vendor, and has no better footing in a court of equity than his vendor.Sugden on Vend., 722; 7 Cranch, 48; Boone v. Chiles, 10 Peters, 210.

If both parties claim by an equitable title, he who is prior in time, is deemed better in right. Where the equities are equal in merit,- the law prevails. To constitute an innocent purchaser, some new, present consideration must pass, which may be money, property, or the satisfaction of an existing. security. The purchase of property under one’s own judgment for an antecedent debt, without paying any new consideration, does not constitute such a purchaser. Arnold v. Patrick, 6 Paige Ch. R., 316; Jackson v. Campbell, 19 John. R., 282. In Vattier v. Hinde, 7 Peters’ R., 270, the conveyance was in part satisfaction of an indebtedness. No money was paid. Therefore, it was said “ that this purchase could not avail, for he was bound to notice the equity of Doyle.” If a party take a security, or specific property, in satisfaction or discharge of a pre-existing debt, he is a bona fide purchaser, and is not affected by previous equities of which he had no knowledge. Swift v. Tyson, 16 Peters, 1-24; Brush v. Scribner, 16 Conn., 388. In Dunlap v. Bennett, 5 S. & M., 710, a deed of trust was made to secure sundry debts. It was held that it was good against the vendor’s lien, as to all the debts originating after the conveyance was made ; but not so as to the antecedent debts.

In Pope v. Pope, 40 Miss. R., 517, a deed in trust was executed to Brantly, trustee, to secure certain debts due to D. B. Nabors & Co. Speaking of this deed, the court say: “ They do not occupy the attitude of purchasers without notice, because it was not an absolute conveyance, but a mere security for their debt, and that, a pre-existing one. In such cases it is settled, a party does not come within the third article of the statutes of frauds in favor of bona fide purchasers.” The court refer to Pack v. Harney, 4 S. & M., 255. That case turned on the points whether the conveyances (deeds in trust) were void on their face as to creditors, and whether the trustee and cestui que trust must participate in the scheme and intent to defraud. Arguendo, the court say: “ The statute protects a bona fide purchaser, because he parts with his money under belief that he is getting a title uncontaminated with fraud. But the creditor parts with nothing. The giving of the deed of trust does not extinguish his debt, nor did he contract on the faith of such security. He is not a purchaser, nor does he part with Ms money for an interest in the land.”

Counsel for the plaintiff in error impugns the soundness of the judgment in Pope v. Pope, and invites us to reconsider it. We concur in the decision, limited and controlled by the facts of the case. If the court meant to be understood that a mortgage or deed in trust, resting upon a present and contemporaneous valuable consideration, could not entitle the mortgagee to the protection of the statute, as an innocent purchaser, we are not prepared to say that we concur in that doctrine. But in so far as the court declares that a deed in trust or mortgage executed to secure a pre-existing debt, does not make the mortgagee a purchaser for value, so as to avail of the statute, we think is in accord and harmony with the authorities ; and that was really the only point for adjudication.

Perkins, Livingston & Post sold the mill, engine, and appurtenances to Swank, in 1866. It was purchased with a view to use on the lands contracted to be purchased from the Harpers, and had been set up and put in operation before the execution of the mortgage. The note for the $1,000 was the continuation of the pre-existing debt for the mill and engine, and the mortgage was a security for such debt. It is evident that Perkins, Livingston, & Post parted with no new consideration, either in money or property. Nor did they “ accept property or extinguish a pre-existing debt ” which would entitle them to protection. They are not Iona fide purchasers for valuable consideration therefore, and are not in an attitude to successfully oppose the prior equity. If notice of the prior equity is imparted to an innocent purchaser, for value, before he has paid any or all the purchase money, although he has his deed, the equity takes hold of so much of the price as is unpaid. Foy v. Parker^*

It were difficult to see, in the circumstances of the parties, how Perkins, Livingston & Post could be innocent purchasers. Their mortgage, in referring for description to the property, says that it is on the property purchased by Swank from the Harpers. Purchased how, and to what extent? By absolute deed of conveyance ? None such was of record, as investigation would have shown. If the possession of Swank was under and in right of purchase and by claim thereof, such possession could be notice only of the character of title, legal or equitable, which he had; and strangers dealing with him, take the risk of the extent of his estate and interest in the property.

It was said by the court in Dixon v. Lacoste, 1 S. & M., 107, “ that possession by the vendee is evidence to creditors and purchasers of the conveyance ” (unregistered). In that case the contest was between the lien of a judgment creditor of the vendor, and the vendee in possession under an unregistered deed. We suppose the principle meant to be asserted, is, that possession, of a vendee, is notice of his title, whatever it is. The possession is a fact to put creditors and purchasers on inquiry as to the nature and extent of the estate of the vendee, and has the effect of charging with knowledge of his actual estate and title.

If we are correct in our apprehension of the principle, Perkins, Livingston & Post had notice of the interest of Swank in the property bought from the Harpers. That interest was an equitable title under his contract of purchase, the stipulations of which operated to create a lien on all the property on the plantation, and empowered the Harpers to sell all or any of it, to satisfy certain installments, if not punctually met. Default had been made by Swank, in paying the installments of 1st January and 1st April.

Are the mill, engine, etc., fixtures to the freehold? There is a very full discussion of the law of fixtures in Van Ness v. Pacard, 2 Pet., 147. In that case, the defendant erected a dwelling-house two stories high, a cellar of stone, and brick foundation, and a brick chimney' — -the brick chimney let into the ground. This was all done with a view to carry on the business of a dairyman. The defendant was tenant for years. It was conceded that the rule of the common law is, that whatever is annexed to the freehold, becomes part of it, and cannot be removed, except by the owner of the inheritanee. But there were always exceptions in favor of trade and manufactures, and the latitude was broad in favor of the tenant against the landlord, but strict in favor of the heir against the executor or administrator.

The principle is now firmly established that fixtures erected for the purposes of manufacturing, or for a trade, are, in favor of the tenant, personalty, and he may remove them.

The English courts seem to have made no relaxation in favor of erections for agricultural uses. Elwes v. Maw, 3 East’s Rep., 38. But it is otherwise in the United States. In the case quoted from 2 Peters, the buildings were held to be personalty. There has been a considerable modification of the old rule, that the erections must not be attached to the freehold, so as to be incapable of removal without some disturbance of the soil. In Lanton v. Lanton, 3 Atk., 13, the shed in which the engine was placed, was made of brick and stone. In Penton v. Robart, 2 East’s R., 88, the building had a brick foundation let into the ground, with a chimney attached.

The leading test to determine whether a thing be a fixture or not, is to look at the intention with which it was put on the land. Steam boilers and engines used, in a marble mill, pass as a part of the realty by a mortgage of the estate by the owner. Sweeter v. Jones, 35 Verm., 317. So a steam engine placed in a shop or factory to create the moving dower — the engine and shafting would be a part of the realty, and would pass by deed or mortgage. Hill v. Wentworth, 28 Verm., 428. Whatever erections are put upon the premises by the mortgagor, inure to the benefit of the mortgagee, as part of the realty. Hays v. Doane, 3 Stock., 96; 1 Wash. Real Prop., 17, p. 26 a. It is evident that Swank bought the machinery after he had made the verbal agreement to purchase. Whether put on the premises before or after the contract was reduced to writing, is not clear from the testimony. His intent was to use it in converting timber into lumber for the market. This he had no right to do as tenant, or under any stipulation in his lease. He did erect the mill, and apply it to make lumber, which he could do only as vendee. .His agreement with the Messrs. Harper conferred on him the equitable title to the premises. At its date, the mill and machinery were on the land, or were shortly after put up, and thereby became subject to the lien reserved, which covered whatever of property Swank then had, or should put on the premises.

We are inclined to the opinion that whatever fixtures Swank put on the land in his claim and right as purchaser, became part of the realty, and inured to the benefit of his vendor’s equity, or lien on the land. The mortgagor, after forfeiture, especially, has but an equity of redemption ; yet all improvements which are put on the property and attached to the freehold, become fixtures, and are part of the realty.

If Swank had not changed his relation to the Harpers from that of tenant to that of vendee, we would have no difficulty in holding that he would have a right at the termination of his tenancy, to remove the mill, engine, and appurtenances, and that it would have been personalty, and that he had power to encumber it by mortgage or otherwise.

If Perkins, Livingston & Post had taken a mortgage at the time of the sale of the mill and appurtenances, and before it was erected on the premises, we are of opinion that the mortgage would have prevailed, as against the Harpers. For at that time the property had not been converted into realty or become a fixture on the freehold, nor had the lien in favor of the Harpers under the contract taken hold of it.

It is urged in behalf of the Harpers that the mortgage to Perkins, Livingston & Post was not properly acknowledged, and therefore improvidently admitted to registration. Its sufficiency is sustained by the case of Smith v. Williams, 38 Miss. R., 56, decided in 1859. We are requested by counsel to review that decision. If we doubted the correctness of that adjudication, we should forbear to call it in question now. It establishes a rule of property, and the consequences in disturbing the titles to property which have been made in conformity to it, would be disastrous in the extreme. The registration of tbe mortgage is also relied on as giving a superior right to Perkins, Livingston & Post. The policy o this statute is to make the registration notice to subsequent purchasers and creditors. All deeds of trust and mortgages are void as to creditors and subsequent purchasers for valuable consideration without notice, unless recorded. Rev. Code, art. 21, p. 310. If the purchaser, however, has notice of the prior unregistered mortgage, the statute does not declare what shall be the consequence. As to his title, that is left to the control and operation of the general equity-law. If the subsequent purchaser or creditor has knowledge of a title or equity derived from, or created by his vendor, elder than his purchase, although he pays a price deemed valuable in law, his conscience is affected, and these statutes do not afford him protection.

Let the decree of the chancellor be Affirmed.

* Supra, p. 260.

* Supra, p. 260.