162 Mo. 146 | Mo. | 1901
This is a proceeding in equity to remove an alleged cloud upon the title to lot twenty-six in Knickerbocker Heights, an addition to Kansas City. The plaintiff obtained a decree in the circuit court, and defendant appeals.
The record discloses the following state of facts: On February 20,1888, Henry L. Tyler owned said lot," and on that day he executed a deed of trust thereon to Charles H. Nearing, trustee, to secure his promissory note for twelve hundred and fiftv dollars, payable five years after date to the order of Joseph H. Bauerlein, and the same was properly recorded on February 23, 1888. Some time prior to May 21, 1889, Bauerlein transferred the note to George J. Monroe. Because the note was over a year old, but not yet due, Monroe conceived the idea that he would have difficulty in negotiating it, so he pro
I.
The Tyler deed of trust being properly recorded, Mensendick acquired only the equity of redemption remaining in Tyler, and under section 2419, Revised Statutes 1889, he purchased with notice of the Tyler deed of trust, and held subject to it. So, when Mensendick made the deed of trust to the Citizens Loan & Trust Company (in reality to Monroe), that deed of trust became a valid deed of trust on the equity of redemption and subject to the prior lien of the Tyler deed of trust. This was the status of the title disclosed by the records, and of which every person asserting title under the Mensendick deed of trust was charged with notice by the statutes. When Smith took the Mensendick deed of trust from Monroe, he was charged with notice of this status of the title, and can not be heard to impeach that notice by averring that he relied upon the assurance of Monroe that the Mensendick deed of trust
This determines this controversy so far as the records are concerned. But the plaintiff claims that the defendant’s apparent record title is overthrown by matters' in pais; that is, that Monroe owned the Tyler note and deed of trust; that he caused the conveyance of the equity of redemption by Tyler to Mensendick, and caused Mensendick to make the note and deed of trust to him, upon an agreement that it would be received in substitution for and payment of the Tyler note and deed of trust; that he, Monroe, held the Tyler note until after its maturity and only transferred it to Castle by mistake and oversight; that as Castle took the note after maturity he took it subject.to any equities or defenses that could have been made to it if it had remained in Monroe’s hands, and that as Monroe could not enforce it because it was paid, the defendant who purchased at the trustee’s sale under the Tyler deed of trust for value and without notice, acquired no better title than Monroe or Castle would have gotten if either of them had been the purchaser, which would in law have been no title at all; and without this, that the defendant had actual notice of the facts relating to these transactions, at the time he purchased, in that he acted through A. T. King as his agent, and King knew all the facts and, therefore, the defendant must be held to know all his agent knew about the business his agent was authorized to transact for him.
For neither Monroe, Castle or King would be bona fide purchasers under our statute, as they could not be said to have purchased “in the honest belief that his vendor had a right to sell,” nor could they claim that their purchase was “without notice actual or constructive of any adverse rights, claims, interests or equities of others in and to the property sold.” [Webb on Rec. Tit., see. 202.]
The rule is thus stated in Webb on Record of Title, section 154: “The policy of the registry law is that the title and all that affects it should be disclosed by the public records, and upon the theory that it is shown, the rule obtains that a purchaser may rely upon the title as it appears of record, and that he will be. protected against unrecorded conveyances, outstanding equities, secret liens and conditions of which he had no notice. This proposition embodies the general result of benefit and protection afforded by the recording acts. The rule that a perfect record title affords protection does not obtain where the purchaser is chargeable with actual notice. Nor does it obtain when the apparent title of record consists in part of a void deed, for such an instrument being a nullity can ác
Of course the record would not show the agreement to substitute the Mensendick deed of trust for the Tyler deed of trust, nor that it was received as payment therefor, nor can the records alone show payment of a mortgage except by a release of the mortgage. As between the parties to the mortgage, or those taking it with notice thereof, a payment releases the mortgage in fact, although not on the records, and a sale under a paid mortgage passes no title to anyone who takes with notice. This is the extent of the rule in the eases cited by plaintiff. The weight of authority does not support the plaintiff’s contention that payment of the debt secured by the mortgage, ipso facto wipes out the mortgage so that a purchaser for value and without notice at the foreclosure sale acquires no title. The reason of the rule which protects bona fide purchasers at such sales is that they have a right to rely upon the facts disclosed by the record, and that the mortgagor, by permitting the paid mortgage to remain unreleased on the public records, holds out an apparent authority to sell under the mortgage, and thus makes it possible to work a fraud upon bona fide purchasers which he had it in his power to prevent by taking effective and timely steps to have the mortgage released, and as between two such innocent persons, the loss must fall on him who made the injury to others possible.
As in this case: Smith had notice in law but not in fact of the existence of the Tyler deed of trust standing unsatisfied on the records. Instead of taking timely steps to have it can-
There is a material difference between Boyd’s status here, as the bona fide purchaser at the trustee’s sale, and what his status would have been if he had purchased the note and deed of trust from Castle, and had sued to foreclose the deed of trust. In the latter case he would have failed, for he would hold the note as Castle’s assignee after its maturity, and, therefore, the equities as against Castle would have been open to inquiry, and as Castle took it after maturity from Monroe, the equities as to Monroe would have been open to inquiry, and as to Monroe the note was paid and satisfied. But the bona fide purchaser at a trustee’s sale under a duly recorded deed of trust which appears unsatisfied on the public records, is not obliged to look any further. He derives title through the records, not.by owning the note secured by the deed. At first blush this might appear "to be a solecism, but a more critical analysis and the weight of adjudicated cases demonstrates that it is the true rule, and it is,necessary, as well as logical and legal, because, otherwise no man would be safe in buying at a trustee’s sale, lest perchance, it might fall out that the debt had been paid, and the value of such securities would thereby
It is not contended that Boyd had actual or personal notice of the infirmity in the Tyler deed of trust, but it is insisted that King acted as his agent in having that deed of trust foreclosed and in buying the property for him at that sale, and that King had knowledge and notice of all the facts with respect to that deed of trust, and hence King’s knowledge was Boyd’s knowledge.
It is a general rule of law that notice to an agent during the existence of the agency, and in reference to business coming within the scope of the agent’s authority, is notice to the principal. [Hayward v. Ins. Co., 52 Mo. 181; Meier v. Blume, 80 Mo. 179; Donham v. Hahn, 127 Mo. 439; Bank v. Lovitt, 114 Mo. 519; Traber v. Hicks, 131 Mo. 180.] This rule has been qualified in some cases by confining the notice to the agent to notice received by him during, but not before or after, his agency. [Anderson v. Volmer, 83 Mo. 403; Richardson v. Palmer, 24 Mo. App. 480; Wheeler v. Stock Yards, etc., Co., 66 Mo. App. 260.] And this qualification has itself been relaxed so as to hold that if the agent received notice before his agency began, it must have been so recent that it will be presumed to have been in his mind at the time he acted for the principal. [Chouteau v. Allen, 70 Mo. 290.]
This general rule is also subject to another qualification, that is, if the agent is also personally interested in having the act done and it is measurably sure that the principal would not
In this case King had made a written contract to sell the property to Boyd, and to give him a good title by warranty or trustee’s deed. Boyd submitted the abstract of title to his attorney who advised him that the sale under the Tyler deed of trust would cut out Smith’s title under the Mensendick deed of trust. So, such a sale was made at King’s instance and he bought the property and had the deed made to Boyd. Under these circumstances it is plain that King was not Boyd’s agent in the full sense of that term, for he was a party to the scheme, if not its promoter, to defraud Boyd. He concealed the fact that the Tyler deed of trust was paid by the transfer of the equity of redemption from Tyler to Mensendick, and the execution of the Mensendick deed of trust, because he knew that if he communicated that fact to Boyd or his. attorney, Boyd would not take the property, and that he, King, could not give Boyd any kind of a title, either by a warranty deed or a trustee’s deed, and hence King’s interest was antagonistic to Boyd’s; he was carrying out, with or without the assistance of Monroe and Castle, a fraud upon Boyd and also a fraud upon Smith. It would therefore be a mockery to hold that King was Boyd's agent, so as to affect Boyd with King’s knowledge and notice. In reality King was the seller and Boyd the buyer of the property. King was acting in his own interest in having the property sold under the Tyler deed of trust and in pursuance to his written agreement with Boyd to give him a good
Eor these reasons the judgment of the circuit court is reversed.