Thе plaintiff, receiver of the Industrial Savings Bank of Washington, D. C., brings this action against the trustees under a deed of trust fоr the alleged wrongful release of that instrument. The trustees are sued individually, and damages are claimed in the amount of the note secured by the deed of trust, which was collateral on a loan made by thе Bank.
Defendants answered that the Bank’s note had been paid, that the Bank author
At the trial, after plaintiff and defendants had made their statements to the jury, without evidеnce presented, the court directed a verdict for defendants. Since the payment of the note, the authorization of the release, and the time when the Bank had actual knowledge of the rеlease, were directly in issue, the court evidently was controlled in its action by the fact that the relеase had been recorded thereby giving the Bank constructive notice, and hence the actiоn was barred by limitation. The memorandum overruling plaintiff’s motion for a new trial indicates that such was its point оf view.
The deed of trust placed the trustees in a fiduciary relationship to both the settlor and the Bank.
A primary purpose of the recordation of an instrument is to give notice of its existence to those about to deal with the properly involved. Such persons are protеcted by, and charged with, notice of the recorded instrument. The purpose, in most instances, is not to inform those with existing interests of events purportedly affecting their property and to charge them with such knowledge. It is often said that a recordation operates prospectively, not retrospеctively. To attribute the latter effect to a recordation would necessitate periodiс checks by owners, lienholders, and others with existing interests. A person should be circumspect when he enters into a transaction and in performing his subsequent contractual duties, but to require him to act as a membеr of a watch and ward society to safeguard his position against all the world is neither reasonable nor in accord with the authorities.
As has been indicated, the more common question, which has been answered in the negative, is whether a recordation of subsequent claims against the property is noticе to the mortgagee. Here, there is even less reason to construe a recordation as giving сonstructive notice to the Bank. The Bank is not claiming against another with an equitable interest in the prоperty but against the trustees. Here, the trustees owed the Bank the continuing obligation of keeping it informed of action upon their part that would prejudice its rights. The fiduciary relationship has significance nоt only by making it necessary that the Bank be notified of such action, hut also in determining what constitutes notification. The language and the decisions to which defendants call our attention, for the most part, reveal that constructive notice has the same consequences as actual notice to thоse chargeable with constructive notice, but this does not answer the question whether the Bank was chаrgeable with constructive notice. It is clear to us that constructive notice of recordation of the release is not applicable to the Bank or its receiver.
Reversed.
Notes
Lonnartz v. Estate of Popp, 118 Ill. App. 31; Rheem v. Allnut,
D.C.Code, Tit. 25, § 191; see § 171.
Church, Inc., v. Holmes,
Mayse v. Mineola Co-op. Exchange,
Wolfe v. Murphy,
While most breaches of trust are frauds in law in respect to the cestui, it is unnecessary to use any definitе label in the present case. In any event, for this alleged breach of trust, releasing the se