Mitchell, J.
While some of the findings of fact and conclusions of law of the trial court are probably erroneous, yet, in view of other facts found, these are not material, for, in our judgment, the whole case comes down to the single question whether the South Market Company was a purchaser in good faith, for value, without notice of plaintiff’s mortgage.
The deed of the property from Fletcher having been taken in the name of Crowell with the knowledge and consent of the Cleveland Farming Company, no enforceable trust in its favor resulted from the fact that it paid the consideration. 1878 G. S. ch. 43, § 7.
It may be that the property would have been charged with a constructive trust in favor of the creditors of the company, but [62] that is a question between them and Crowell, which is not involved in this suit.
The fact that Crowell was designated “trustee” in the deed, without naming the beneficiary, or stating the nature of the trust, was, of course, insufficient to create any trust; and it can hardly be necessary to suggest that a trust could not be ingrafted on to this conveyance by parol evidence. 1878 G. S. ch. 41, § 10.
Hence the testimony of Crowell that he held the land in trust for the Farming Company was incompetent, and, even if admitted without objection, proved nothing.
Hence, under the deed from Fletcher, Crowell was, as against the Farming Company, the absolute owner of the property. But we fail to see why his subsequent declaration of trust in favor of Parsons and Handy was not valid, and did not establish an enforceable trust as against him or any one purchasing from him with notice of it. It is not important whether Crowell received any consideration for this declaration of trust. He had a right to give away his property if he saw fit. If he received no consideration, then it stood as an executed gift, and, as it seems to us, the trust became a mere passive one, which vested in Parsons and Handy each, the legal title to one undivided third of the property.
But whether they took a legal or only an equitable title is immaterial, for an equitable interest is mortgageable equally with a legal one. Nor is it at all material that plaintiff did not know of this declaration of trust when it took its mortgage from Parsons. If it took the mortgage without examining the title, the mortgage nevertheless covered whatever interest Parsons in fact had in the premises. Hence plaintiff’s mortgage from Parsons was valid as between the parties, and will take priority over the subsequent conveyance from Parsons to the Market Company, unless the latter is protected as a purchaser in good faith for value whose conveyance was first recorded. The record of the mortgage from Parsons to plaintiff, without the record of the declaration of trust by Crowell in favor of Parsons, would not be constructive notice to any subsequent purchaser from Crowell, because not in the chain of title; and, as this declaration of trust was not recorded, the case comes down to the question whether the fact that Crowell was, in the deed from Fletcher, described as “trustee,” was sufficient to put [63] the Market Company on inquiry, and, if so, whether the investigation it made and the information it received was such as a reasonably prudent man would have acted on without further inquiry. It is a familiar doctrine that a purchaser is chargeable with notice of facts recited in deeds under or through which he takes title; and while the word “trustee” in a deed gives no notice of the name of the beneficiary, or of the character of the trust, yet it does give notice of a trust of some description, which imposes the duty of inquiry as to its character and limitations; and whatever is sufficient to put a person of ordinary prudence upon inquiry is constructive notice of everything to which that inquiry would presumably have led.
But the court finds that the Market Company, before and at the time of the conveyance to it by Crowell, was informed by Crowell that the Farming Company had paid the entire consideration for the property so conveyed to him, and that he then held the title thereto in trust for the use and benefit of the Company, and that he was disposing of the property for the purpose of closing up its business; that in reliance upon such notice, and believing the fact to be that the Farming Company was desirous of disposing of the property by and through Crowell, then holding the title thereto for such purposes, the Market Company purchased and paid for the property. We have carefully examined the evidence, and are fully satisfied that it abundantly justified these findings. In fact the testimony of Crowell and of Benton (who, as its president, transacted the business in behalf of the Market Company) to that effect stands uncontradicted.
The facts thus found constituted due diligence in following up the inquiry suggested by the word “trustee” in the deed, and the information received was, under the circumstances, such as to render it unnecessary, in the exercise of reasonable care, to make further inquiries as to the possible rights of any one, at least other than of the Farming Company.
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Mitchell, J.
While some of the findings of fact and conclusions of law of the trial court are probably erroneous, yet, in view of other facts found, these are not material, for, in our judgment, the whole case comes down to the single question whether the South Market Company was a purchaser in good faith, for value, without notice of plaintiff’s mortgage.
The deed of the property from Fletcher having been taken in the name of Crowell with the knowledge and consent of the Cleveland Farming Company, no enforceable trust in its favor resulted from the fact that it paid the consideration. 1878 G. S. ch. 43, § 7.
It may be that the property would have been charged with a constructive trust in favor of the creditors of the company, but [62] that is a question between them and Crowell, which is not involved in this suit.
The fact that Crowell was designated “trustee” in the deed, without naming the beneficiary, or stating the nature of the trust, was, of course, insufficient to create any trust; and it can hardly be necessary to suggest that a trust could not be ingrafted on to this conveyance by parol evidence. 1878 G. S. ch. 41, § 10.
Hence the testimony of Crowell that he held the land in trust for the Farming Company was incompetent, and, even if admitted without objection, proved nothing.
Hence, under the deed from Fletcher, Crowell was, as against the Farming Company, the absolute owner of the property. But we fail to see why his subsequent declaration of trust in favor of Parsons and Handy was not valid, and did not establish an enforceable trust as against him or any one purchasing from him with notice of it. It is not important whether Crowell received any consideration for this declaration of trust. He had a right to give away his property if he saw fit. If he received no consideration, then it stood as an executed gift, and, as it seems to us, the trust became a mere passive one, which vested in Parsons and Handy each, the legal title to one undivided third of the property.
But whether they took a legal or only an equitable title is immaterial, for an equitable interest is mortgageable equally with a legal one. Nor is it at all material that plaintiff did not know of this declaration of trust when it took its mortgage from Parsons. If it took the mortgage without examining the title, the mortgage nevertheless covered whatever interest Parsons in fact had in the premises. Hence plaintiff’s mortgage from Parsons was valid as between the parties, and will take priority over the subsequent conveyance from Parsons to the Market Company, unless the latter is protected as a purchaser in good faith for value whose conveyance was first recorded. The record of the mortgage from Parsons to plaintiff, without the record of the declaration of trust by Crowell in favor of Parsons, would not be constructive notice to any subsequent purchaser from Crowell, because not in the chain of title; and, as this declaration of trust was not recorded, the case comes down to the question whether the fact that Crowell was, in the deed from Fletcher, described as “trustee,” was sufficient to put [63] the Market Company on inquiry, and, if so, whether the investigation it made and the information it received was such as a reasonably prudent man would have acted on without further inquiry. It is a familiar doctrine that a purchaser is chargeable with notice of facts recited in deeds under or through which he takes title; and while the word “trustee” in a deed gives no notice of the name of the beneficiary, or of the character of the trust, yet it does give notice of a trust of some description, which imposes the duty of inquiry as to its character and limitations; and whatever is sufficient to put a person of ordinary prudence upon inquiry is constructive notice of everything to which that inquiry would presumably have led.
But the court finds that the Market Company, before and at the time of the conveyance to it by Crowell, was informed by Crowell that the Farming Company had paid the entire consideration for the property so conveyed to him, and that he then held the title thereto in trust for the use and benefit of the Company, and that he was disposing of the property for the purpose of closing up its business; that in reliance upon such notice, and believing the fact to be that the Farming Company was desirous of disposing of the property by and through Crowell, then holding the title thereto for such purposes, the Market Company purchased and paid for the property. We have carefully examined the evidence, and are fully satisfied that it abundantly justified these findings. In fact the testimony of Crowell and of Benton (who, as its president, transacted the business in behalf of the Market Company) to that effect stands uncontradicted.
The facts thus found constituted due diligence in following up the inquiry suggested by the word “trustee” in the deed, and the information received was, under the circumstances, such as to render it unnecessary, in the exercise of reasonable care, to make further inquiries as to the possible rights of any one, at least other than of the Farming Company.
As the deed gave no indication as to who the possible beneficiary was, the only persons of whom inquiry could or would naturally be made were the grantor and the grantee. If Fletcher, the grantor, had been inquired of, presumably the Market Company would have been informed, as the facts were, that the consideration was paid [64] by the Farming Company, and at its direction the deed made to Crowell. There is nothing, however, to suggest that Fletcher knew of the subsequent declaration of trust by Crowell in favor of Parsons and Handy. The other person of whom inquiry could be made was Crowell, who made a statement of the situation, which, especially in view of the fact that the Farming Company had paid the ■consideration for the property, was reasonable and natural, and one upon which a prudent man would have been justified in acting without inquiry whether possibly some one other than the Farming ■Company might not' be the beneficiary. Under the circumstances, the conclusion at which any one would naturally have arrived would .have been that, for convenience, the title had been put in Crowell, in trust (perhaps not enforceable, because not in writing) for the Farming Company, which paid the consideration; and it can make no difference whether the information was given by Crowell in response to inquiry or volunteered to induce the Market Company to make the purchase. And while it is true that the possibility that a false or incompetent answer may be given is no excuse for not making inquiry, yet a false answer or a reasonable answer given to an inquiry made may dispense with the necessity of further inquiry. All that is required of a party who is put upon inquiry is good faith and reasonable care in following up the inquiry which the notice given him suggests. As the information given by Crowell suggested an interest in the property on the part of the Farming Company, it is quite possible, had there existed an enforceable trust in favor of that company, and its limitations and restrictions had been such that Crowell had no power to convey, that, as to the Farming Company, the Market Company would have been chargeable with notice of these facts, of which presumably the latter would have been informed upon further inquiry of the former. But there was nothing in the information received of Crowell that would have suggested to any man of ordinary prudence that Parsons or Handy individually had any interest in the land, especially as they themselves were promoting and negotiating for this very conveyance by Crowell to the Market Company. The court also finds that the Market Company never had any knowledge or information of any character of the existence of this declaration of trust until November, 1891, — nearly a year after its deed from Crowell was executed and recorded.
(Opinion published 55 N. W. Rep. 825.)
As applied to Benton, its president, who transacted the business in its behalf, this finding is unquestionably justified by the evidence. Counsel for plaintiff claims that Benton was chargeable with actual notice, because this declaration of trust and the mortgage from Parsons to plaintiff were contained in an abstract of title of the property which he had procured, and which he did not, but ought to have, examined. We do not see that one who obtains an abstract of title, and then buys, without examining it, is in any worse position than one who buys without obtaining an abstract at all. But we do not understand the evidence as counsel seems to. We understand Benton’s testimony to refer to the abstract brought down to the date of the conveyance by Fletcher, and not to the one brought down to the fall of 1891, after he learned of the claim of the plaintiff. Moreover, the declaration of trust could not have been on any abstract at the time of the conveyance to the Market Company, for it was not on record.
It is also claimed-that the Market Company is chargeable with notice of plaintiff’s rights, because Crowell, Handy, and Parsons had actual knowledge of them, and that, as they were corporators of the Market Company, their knowledge was its knowledge. Had these three constituted all the corporators of this Company, there might have been something in this point, and that is as far as any authority cited by plaintiff goes. But in this case there were other corpo-rators, who were taking and paying for stock in the corporation, who had no such notice. Generally, and for most purposes, a corporation is a legal entity distinct from the body of its stockholders; and, in any event, to render the knowledge of. the individual corporators the knowledge of the corporation, it must be the knowledge of all the corporators.
The suggestion that the Market Company was not a purchaser for a valuable consideration is without merit. The issuing of paid-úp stock of the corporation in payment of the property of itself constituted a valuable consideration.
Order affirmed.