Newman v. Samuels

17 Iowa 528

• Court: Supreme Court of Iowa
• Decided: December 13, 1864
• Status: Published

Opinion

Lowe, J.

Conceding, as we must do, from all the facts brought to light in this case, that the security spoken of in the’ pleadings, was valid in its inception, and that the debt therein specified has not yet all been paid to ISTewman, the question still remains whether in consequence of matters subsequently occurring, the lien created by said security has not been lost to the plaintiff, and the property now in controversy discharged therefrom so far as the rights of the defendants have attached, and especially those of Tut-tle and the Wakefields.

1. Deed oe mortgage m equity. Our first inquiry will be as to the nature of the instrument, its true character in legal contemplation as a security, how far the rights of the parties thereto were affected or changed by the death of J. J. j)yer. an(j wfiat were the relations which Samu-els sustained to Newman, the creditor, at the time the trust deed or mortgage was discharged, and the sale of the premises made to Langworthy by the administrator.

The language of the instrument ex vi termini, fixes its true character and shows it to be simply a security. It commences in this wise: “ Eor the purpose of securing to Anderson M. Newman, of the county of Pendleton and State of Virginia, the sum of $8,100, with interest from date at the rate of ten per cent per annum, said interest to be paid annually, on the 24th day of June, in the city of New York, &c.” Then follows the granting clause conveying the property in question to Ben. M. Samuels, accompanied with the usual power to sell and convey if the money is not paid.

In ordinary acceptation this is called a deed of trust, but in legal effect it is a mortgage, superadded thereto, to be sure, the power of sale, which does not change its essential attributes. Willard’s Eq., 430; Story’s Eq., §1018; 4 Kent, 146, marginal; Powell on Mortgages, 9 and 10. In the case of Woodruff v. Robb, 19 Ohio, 212, the Supreme Court, speaking of a conveyance of land to a trustee as collateral security for the payment of a debt, with power to sell on default of payment, say, the deed in question contains all the substantial qualities of a mortgage, and nothing more. It was a mere security for a debt, to be void if the debt were paid. The fact that the conveyance was made to a person other than the creditor, and that it contained a power to sell, does not change its character as a mortgage. The same general principle was declared in the case of Sargent v. Howe, 21 Ill., 149; and in the case of Eaton v. Whiting, 3 Pick., 484, and many other authorities cited in the 11th volume of the American Law Register, 643-649, in an admirable article on the subject of sales and titles under deeds of trust, prepared with great care", arranged under appropriate heads or divisions, the author of which is now a member of this bench (Justice Dillon), and for which it is not too much to say the profession has been laid under many obligations. It would seem from the very thorough research which he has made of the authorities on this subject that the true criterion to be deduced from them is this: “ If a transaction resolve itself into a security, whatever may be its form, and whatever name the parties may choose to to give it, it is in equity a mortgage.” 2 Sumn., 533; Cotterel v. Long, 20 Ohio, 464, 472; Wilcox v. Morris, 1 Mass. (N. C.), 116; 1 Wis., 527; 5 Ark., 321; 2 Texas, 1.

Again, another reason why a deed of trust, intended as a security, will be deemed to possess the qualities and treated as a mortgage, is, that the legal effect of each class of instruments is the same, and more especially under the statutes of this State; that is to say the grantor of each before foreclosure or sale has the right to redeem, the grantor of each, especially in equity, before sale is deemed the actual owner of the premises and entitled to the use and possession thereof, and in each the grantors’ rights are subject to execution.

s.. — At-reyancein [iufm.] Now, these are incidents or conditions which do not in law attach themselves or belong to another class of deeds of trust, where the grantor parts wholly with his title, giving it to a trustee absolutely for the purpose of raising a fund to pay debts generally without designation or’ particular debts ‘ which may be specified.

Pproceeas.oi [in/ra.i It is to this class of trusts where the debts are scheduled that the doctrine applies which requires the purchaser to to the due application of the trust fund before he gets a perfect title. The distinction between these different trust-deeds is obvious, and very well drawn by Justice Caldwell in the case of Woodruff v. Robb, 19 Ohio, 212.

Besides the incidents already alluded to, separating the two classes of instruments, we may add that the latter could, in no just sense, be treated as a security, but simply a provision which a debtor makes sometimes, in his will, sometimes by a general assignment of his property, and sometimes by deeds of trust, for the payment of debts already existing. In doing so, he usually selects his own agent, without the knowledge of the creditor, for the execution of the trust thus created. On the other hand, the former class is made for a different purpose, namely: that of securing a debt in case of default. It is made usually at the time the debt is incurred and the credit given, when all the terms thereof are mutually agreed upon between the parties, including the agent or trustee who is to execute the same, and who becomes thereby the recognized agent of both parties, with no other powers than those expressed in the deed, which constitute the source and limit of his authority to act in the premises. We need not say, however, that the power to sell carries with it by necessary implication the power to convey. If not, it'is fair to presume no sale would be ever effected. And, in this class of securities, if the conveyance is made, the purchaser tabes the property discharged of the former lien, to get rid of which the sale and purchase took place, and subject to no contingencies arising from the infidelity of the trustee in the application of the funds.

4. _ ana ais-trust deed, II. Prior to the death of Dyer, if default was made, Newman had his election to proceed in one of two ways to make his debt: by bill in chancery to foreclose the deed of trust, or bv directing1 the trustee to go forward and execute the trust m the method prescribed in the deed. After his death these remedies were not taken away or impaired, but another was added or supplied to him, under the statute regulating the settlement of estates, namely, by proving and filing his claim for allowance before the County Court, and seeking its satisfaction out of the assets or funds which should come into the hands of the administrator. This latter course Newman adopted; his claim was duly filed and allowed. The trust property, under the order of the County Court, was sold, and the purchase-money paid, and the property duly conveyed, both by the administrator and the trustee, to the purchaser. We are not inclined to the opinion that Newman, in pursuing this course, waived his lien under the trust deed, without more, nor are we inclined to think that it was competent for Samuels to cancel the deed of trust under the circumstances, if he possessed no other power at the time than what was derived from the deed creating him a trustee.

But we proceed to show that Samuels sustained the double relation of trustee and attorney at law, or collecting agent, to Newman at the time he canceled the deed of trust, and that his act as such is effectual and binding upon Newman.

First. As to the fact of this relationship: It is conceded that, by profession, Samuels was a lawyer. During the pendency of the negotiation between the administrator and Langwórthy, for the trust property, Samuels visited the plaintiff, in Virginia, and had a conversation with him about his claim against the Dyer estate secured by the trust deed. This claim, evidenced by a note, he takes from Newman for collection, as Newman himself avers expressly in his petition, giving a receipt therefor. Samuels brings the note to Iowa. He communicates the fact to Wiltse, the attorney of Langworthy, that he has the same in his possession. He presented and had said claim allowed, and a judgment entered thereon, in the County Court, at the March term, 1857, in favor of Newman. This judgment Langworthy, in his cross-bill, charges was a fraud upon the estate of Dyer, for reasons therein stated. Among them was the charge that Samuels, in the procurement of said judgment, had acted as the attorney for the estate of Dyer and also for Newman, and that he had been Newman’s attorney for a series of years. Samuels, who is made defendant in the cross-bill, makes no denial of the allegation that he was acting as the attorney of Newman. But Newman, in his reply to the cross-bill, makes this answer to the charge: that, upon Samuels advising him that it was required by the statutes of Iowa that all debts due from decedent’s estates must be submitted to the county courts for allowance, he thereupon intrusted the said note to the care of said Samuels, for presentation to the County Court for such allowance, and took his receipt for the same; and that, except in the matter herein named, the said Samuels had never been his attorney or legal adviser, &c.; denying, to be sure, that he was his attorney in other matters, and for a number of years, as charged in the cross-bill, but admitting that, in this particular transaction, Samuels was his attorney. This admission, coupled with the allegation in plaintiff’s petition that he had given the claim to Samuels for collection while he was in Yirginia, establishes beyond all dispute the relation of client and attorney between them, as well as that of trustee and beneficiary. Now there is a very wide difference between the powers, duties, obligations and responsibilities of these two agencies or relations, and the question returns, whether as the attorney of Uewman, intrusted with the collection of this claim, it was not competent for Samuels to release the deed of trust at the time and under the circumstances which he did.

Uniting in himself the powers and duties both of trustee and attorney, he was at liberty, in collecting the claim, to adopt one of three courses, in all of which the purchaser of the trust property is equally protected, if the proceedings are regular and lawful, namely: By selling the trust property in the manner specified by the terms of the trust; by foreclosure in equity; and last, through the administration of the estate. He chose, with the concurrence of his client, to adopt the last method. It is not claimed by any one'that the administrator acted without authority in selling the trust property now in controversy, or that the sale was irregular and contrary to law, or that Langworthy did not pay the purchase-money, in fact, to the officer of the law entitled to receive it. Ought he not, therefore, to be protected ? The sale was effected and the money paid, ostensibly, for the benefit of creditors, and according to the testimony, a very considerable amount of indebtedness was, as a matter of fact,, paid with this money. That Newman got no part of the money, was not Langworthy’s fault, but the neglect and fault of Newman’s lawyer, and the administrator, who may have wished to favor the widow of J. J. Dyer. Nevertheless, Newman, as a creditor, was seeking to collect his claim against the estate, through the action of the administrator; he was therefore interested in this sale— interested in the payment of the money under the sale ; but this the purchaser very properly refused to do, till the deed of trust was canceled. Was it competent, therefore, for his lawyer, in collecting the money under this process, to release the deed of trust? If the money was not applied to the payment of the Newman claim, it was not because the purchaser had 'not placed the means in the hands of the proper agents. If the administrator and the attorney violated their trust or neglected their duty in this respect, Newman’s remedy is upon them, and not upon the purchaser. If it is said that the release of the deed of trust is not binding upon Newman because no money was paid to or received by his- attorney, Samuels, the reply is, that the money was paid, in fact, to an officer of law entitled to receive it, in a legal proceeding in which Newman and his attorney made themselves parties. In principle, it does not differ from a case in court. Suppose Samuels, as the attorney of Newman, had filed his bill in equity to foreclose the deed of trust, obtained his judgment,-and sold the property at sheriff’s sale. The sheriff would be the officer to receive the money and make the deed; but if the purchaser would not pay the money till the deed of trust was canceled of record, would it not be competent as well as the duty of the attorney to do so ? And if be did, and by some neglect of tbe attorney or default of tbe sheriff, Newman did not get bis money, could be treat the whole proceeding asa nullity, and go upon the bond a second time for the payment of bis claim ? A negative answer to such a proposition need not be made.

The fact that Samuels did not present, for allowance by the County Court, the claim of Newman, until March following the 26th of November, when the administrator’s sale to Langworthy was finally consummated, is not, in the opinion of the writer, a circumstance that changed the right or power of Samuels, as the attorney and collecting agent of Newman, to cancel the deed of trust. It was enough that he had the claim in his hands at the time, proved up against the estate, as it had been in the month of October before, in Harrisonburg, Yirginia, by Newman himself, in the manner presented by the statute. The filing of it was a matter of form, and could have been done any moment. Thus situated, Samuels, the attorney of Newman, who was a preferred creditor so far as the trust property was concerned, had a right to demand and to receive of the administrator so much of the purchase-money paid as would liquidate Newman’s claim. Not only so, but the law placed in his hands the means to compel the administrator to pay him if he refused. Under such circumstances, if the attorney did discharge the deed of trust, the purchaser had a right to suppose that he intended to look to the administrator and the estate for the payment of his claim, against whom he had a controlling right, the operation of which would have made the payment and collection of bis claim certain beyond any reasonable doubt; and, therefore, the purchaser ought and should be protected, because there was no lack of power, under such circumstances, in the attorney to cancel the deed of trust. The money, as a matter of fact, had been paid, paid by the purchaser to an officer of thé law, in a proceeding under the statute, the regularity of which is not impugned in any particular. The money thus paid is within the legal control, and entirely available to Newman-’s attorney, and in this condition of things he cancels the deed of trust. If afterward he neglects, having thus made himself a party to the administrator’s sale, to demand and take the money of the administrator, and thereby a loss is suffered, it would be the climax of injustice that that loss should be visited upon an innocent purchaser rather than the party who constituted the unfaithful agent.

Without pursuing this topic farther, it is proper to say that the other members of the court forbear to express any opinion upon this question of the power of Samuels to discharge the deed of trust under the circumstances of this case, preferring to limit their affirmance of the case upon other grounds. But as the question was raised and discussed at bar, and lay right in the track of this discussion, the writer supposed that it would not be improper at least to express the views which he entertained upon the subject.

There are two other grounds upon which it is believed 6. estoppel, this case should be affirmed, which we will now consider.

First For the reason that the evidence, taken as a whole, shows that Newman assented to a sale of the trust property to Langworthy, and a diversion of the proceeds thereof to other purposes than the payment of his claim, whereby he waived his lien, and is now estopped from asserting it against the purchasers of the property.

Second. If that is not so, Tuttle and the Wakefields, nevertheless, are subsequent purchasers, without notice of the plaintiff’s lien, and, therefore, are entitled to protection.

With regard to the first point, it is not claimed that the evidence establishes it directly and positively, but tbat it is fairly and reasonably to be inferred from all tbe facts disclosed in the case.

To give these facts and circumstances their legitimate weight, we must recur to what happened in the summer and fall of 1856, during the pendency of the negotiations between the administrator and Langworthy for the sale and purchase of the property in question.

After the terms were agreed upon and the deeds made out, both from the administrator and Samuels, the trustee, it seems that Langworthy was unwilling to pay the money and complete the trade, because he was not satisfied that Samuels’ release would be good without the authority or assent of Newman, although he was assured that Newman’s claim had been liquidated. The consequence was, the trade was suspended from July of that year to the month of November following, to give the parties interested an opportunity to obtain Newman’s assent to the cancellation of the trust-deed.

To this end, Samuels and his sister, Mrs. Dyer, who expected to be largely benefited by the trade, it being considered a very advantageous one for the estate, visited Newman in Yirginia, in the fall of that year. They knew that the sale of the property to Langworthy depended upon their obtaining the assent of Newman to a release of the deed of trust. They both testify in regard to their interview with Newman, and they say they told him all about the sale of the property, the terms thereof, the price, the name of the purchaser, &c.; and Samuels, without recollecting distinctly the fact, says he could not see how he should have failed to inform Newman also that he had canceled the deed of trust, having done so, as he supposed, in July previous. And they further state that Newman expressed himself surprised and gratified that so good a sale bad been made; that be interposed no objection whatever, bnt spoke approvingly of it.

Now, if these facts do not show directly the assent of Newman to the sale of the trust- property and the cancellation of the trust deed, yet they do in some degree, by implication. For instance, he is made acquainted with the sale, or contemplated sale, of the trust property by the administrator of Dyer’s estate. To this he makes no objection. He is made acquainted with the terms of the sale, that is, to whom the property was to go; the amount of the consideration; that it was to be paid in cash, one-half down; to go into the hands of the administrator for the-general purposes of the estate. And one of the terms was that the deed of trust should be canceled (and this, as an intelligent business man, as Newman is proved to be, he would reasonably infer the purchaser would require, if he paid the full purchase-money), yet, according to the testimony, to all this he made no objection, but spoke approvingly of it. Now, in addition to this, Samuels thinks he could not have failed to inform Newman at the same interview that he had already canceled the deed of trust. Interposing no objection to this, as Samuels did not recollect that he did, it is to be presumed that he acquiesced; and acquiescence is believed to be assent, from which we may infer that Newman had concluded to waive his lien under the deed of trust, and look to the assets in the hands of the administrator for the payment of his claim. But let us see how greatly this inference is strengthened by other facts and circumstances.

Samuels, in answer to the question whether, after his return from Yirginia in the fall of 1856, he was not satisfied, from his interview with Newman, that he, Newman, gave his assent to the cancellation of the deed of trust, says: “ I have stated before that I did not recollect of Doct. Newman assenting, in direct terms, to the cancellation; but I state now, that after my interview with Doct. Newman in Yirginia and my return to Dubuque, I would, without hesitation, have executed the deed of release,” &c.

Samuels could not make this declaration, except upon the hypothesis that he had got the impression, from all that Dr. Newman said and did, that he was willing to waive his security under the trust deed and look to the estate for the liquidation of his claim. That Samuels really had this impression is further shown by the fact, that immediately on his return from Yirginia, he told Langworthy and his attorney that he had Newman’s consent to release the de.ed of trust.

Again, under this theory of a waiver, it would be most natural for Newman to take steps to make his claim out of the general assets of this estate. This he attempted to do by proving up his claim and having it allowed before the County Court. In explanation of that, however, he says he was advised by Samuels that the statutes of Iowa required him to do so. Samuels, in his testimony, denies, very distinctly, giving Newman any such advice; and he assigns as a reason therefor, that he knew, if the deed of trust was in force, that such a course was not necessary. But, he says, if the deed of trust had been released, then he should have advised as alleged.

Are there not some grounds for concluding, then, that this latter advice was given and that course adopted, because Newman had concluded, under all the circumstances, to waive his security under the deed of trust, and look to the estate for his debt, especially as he had been assured by Samuels that it was worth from $40,000 to $60,000, and abundantly able to pay all its debts? Besides, this theory is strongly corroborated by the character of the letters which Newman afterwards wrote to Goodrich, the administrator. They are three in number, and all dated after Newman had been fully advised of the sale of the trust property to Langworthy, and the terms and particulars thereof. Yet, with this knowledge, it is remarkable that in none of these letters does he demand or expect any of the purchase-money to be applied on the principal of his debt, but only in payment of the interest.' This does not consist with the idea that he had not consented to a diversion of the proceeds of the trust premises to other purposes. It would have been most natural if he had not done so, to insist upon the payment of his debt, because in law it was a preferred debt, and should have been first paid, and in all probability would have been first paid, but for a different arrangement agreed upon between the parties, and in accordance with which the tenor of these letters perfectly harmonizes. Now, Newman had been to Dubuque, and knew that his security rested upon Dyer’s homestead. In September, 1856, the administrator, learning that Newman had a claim of some $6,000 against the estate, wrote him, expressing his surprise of that fact, and stated, among other things, that he would be obliged to make sale of real estate, in addition to the order he already had to sell the homestead, before he could be paid, but that his interest should be paid as soon as possible. In the meantime, he desired him to send out his claim and prove it up before the county judge. It will be observed that in this letter, the administrator apprises Newman that he already had an order to sell the homestead or trust property; but before he, Newman, could be paid anything more than the interest on his debt, other real estate would have to be sold. Newman’s natural reply to this letter would have been, if his theory of the transaction is the true one, that he could not consent that the proceeds of the sale of the homestead should be diverted to the general purposes of the administration, to the exclusion of his claim, which was the first lien thereon, and for that reason, first entitled to be satisfied. But, instead of this, his reply, which was not made until January thereafter, is in precise accord with the theory of the defense. He informs the administrator that Mr. Samuels had been there a short time before, assisted him in making out a statement of his claim, and that the same had been forwarded with the bond, to be laid before the county court; and then reminds him that he had said, in the close of his letter, that when the sale of the house was completed, he, the administrator, would remit to him the interest on his debt, and tells him to do so — that it would be a very great accommodation. But this was not done; and Newman, in October, 1857, writes the administrator another letter, complaining of this fact, and says: “So far as I can recollect, I have always taken this position in regard to my debt against the estate of Judge Dyer: that if it was thought best, as it regarded the estate, the principal of my debt might remain unpaid for a feto years? Thereby clearly admitting, as we think, that he had consented to a diversion of the fund arising from the sale of the trust property, if only his interest was paid; for it must not be forgotten that when he wrote this letter, he knew of the sale, and that, by the terms thereof, the whole of the purchase-money had been paid, and the purchaser had possession of the property. Yet he does not claim the application of a dollar of it to the payment of his principal debt; doubtless, for the reason that he had consented to a different arrangement, as before stated. The other letter, of a still later date, is of the same general purport, and strongly corroborative of the position occupied by the defense in this case.

Now, these facts (not to speak of others), taken in connection with the lateness of the day in which this suit has been instituted, after a knowledge of all the facts had come to the plaintiff, cannot but strike a plain, unsophisticated mind as exhibiting the plaintiff’s claim to be manifestly inequitable, and his object unjust towards the defendants and their rights; and as snob, he must seek some other tribunal in which to effectuate the same.

Before leaving this branch of the case, however, it is proper to state, that in his testimony, Newman denies that he ever assented to the sale of the trust property, or to the cancellation of the trust deed, or that he ever ratified the same, or that he knew that Samuels had released the trust deed until the 5th day of January, 1859, or that he knew who the purchaser was, or what the terms of the sale were, until long afterward, when he obtained such information from the administrator. Now, Mr. Newman is so broadly contradicted, in many of these particulars, by other witnesses and by his own letters, that the accuracy, not to say credibility of his statements in the premises, must be received with some abatement.

The last point of defense is, that Tuttle and the Wakefields purchased of Langworthy the property in controversy, without any notice of this trust deed, and therefore should be protected'from the plaintiff’s claim.

There are several questions involved in this defense, upon which we will simply express our conclusion, without discussing them, as this opinion is already too long:

6. Record-^nowiedg-’ [!«/"«]. First. There is no evidence, nor is it claimed that these defendants had any actual notice of the existence of the trust deed. They claim to have had no constructive notice of the same, because the acknowledgment thereof was too defective to impart such notice. It failed to contain the statement that it was the voluntary act and deed of the parties. The omission of the word voluntary, is conceded to be a fatal defect. Wickersham v. Reaves and Miller, 1 Iowa, 413; but that the defect was obviated in this instance, because, in recording the instrument, the recorder had inserted this word in its proper place, and therefore the instrument, as recorded, was not defective and imparted the requisite notice. We do not think so. It would be unsafe and dangerous to establish the precedent, that the recorder could change the language of instruments filed for record, and thereby make them read differently from what they did when made and entered into by the parties.

¶ and8._ Curative [infra]. Another answer given to this objection is, that the legislature, in an act approved March 4th, 1858, cured and made effectual all instruments defectively acknow-je(jge(j an(j recorded. The validity of this act is not questioned, except where, by its provisions, it is sought to divert vested rights. Before its passage, the defendants purchased and paid $20,000 for the property in question, and by the well settled and established principles of law, they took it without notice of this incumbrance. It was not competent for the legislature to pass a law making that notice to them of an incumbrance, which was not so at the time of their purchase. This question opens quite a field for discussion, and upon which much learning has been expended, but instead of entering the same and culling the considerations which have influenced our minds,' we shall simply leave it upon the. authority of Brinton v. Seevers, 12 Iowa, 387, and the authorities there cited.

s Notice • -“na itn/rai But what the plaintiff most relies upon, perhaps, in meeting this aspect of the defense, is the notice imparted by the recita^s and references contained in the defendants’ deed. . It is true their deed refers to source 0f Langworthy’s title, namely, the deeds from the administrator and Samuels, and that these contain recitals showing at one time the existence of the trust deed; and hence it is claimed that the principle applies, that if one person has possession or knowledge of a deed under which he derives title, and it recites another deed which shows title in some other person, he is presumed to have notice of the latter deed. Story’s Eq., 400; 2 Leading Cases in Equity, 103.

But in this case, where the recitals in Samuel’s deed, which it is claimed imparts to the purchaser notice of the lien, are referred to and examined, the searcher after incumbrances will learn two facts from the same recitals: First, that a lien or incumbrance once existed upon the property: Second, that now it is fully satisfied, the money paid to Newman the creditor and beneficiary, and the lien created by the trust canceled by the trustee nominated in the deed, and all this appears in the recitals of the deed.

3 _A PprooeedBf imprai. To insist, under such circumstances, that these recitals taken as a whole, impart notice of an actual subsisting lien, is to the mind of the writer of this opinion, an absurdity, a contradiction in terms, an impeachment of the intellect and reason. We are at a loss to conceive upon what ground or principle Tuttle and the Wakefields, the second grantees under the administrator and trustee, are required to push their inquiries any further, unless it should be a necessity that springs out of the doctrine that the purchaser is bound at his peril to see to the application of the purchase-money. If this doctrine was applicable, we apprehend it would hardly be extended beyond the first purchaser of the trust property. It would be strange indeed if this doctrine should be held binding upon all subsequent purchasers.

But we have before shown that it has no application to this class of trusts, that it is limited in its range to a description of trusts absolute upon their face, and created, not simply as a security, but to raise a fund for the payment of existing debts. The distinction between the two classes of trusts is palpable, and will be more clearly perceived and understood by considering the reason upon which the doctrine is founded. At law it does not obtain, but only in equity. The reason why a court of equity insists upon its enforcement under certain contingencies, is that the trustor in such cases is wholly divested of all interest in tbe property, retaining nothing, whilst in equity the beneficiary is deemed to be the real owner, and as such cannot be divested of his ownership until the object of the trust is executed. Hence the responsibility is thrown upon the purchaser before he can get a perfect title as against the beneficiary to see to it that the latter is paid, for until this is done, his title as owner is not extinguished, nor the end of the trust fulfilled. Elliot v. Merryman, 1 Leading Cases in Eq., 80, notes.

Now, the very converse of this is true in regard to the class of trusts before us. In equity the trustor is deemed to be the real owner until after a sale; the beneficiary as simply having a chattel interest, or a security for debt. The constituents of the two instruments are widely different. And, inasmuch, therefore, as the reason for the application of the doctrine in question, based as it is, upon the supposed ownership or estate which the beneficiary has in the trust property in the one case does not, and cannot exist in the other; therefore, the rule which requires the purchaser to see to the application of the trust fund, can have no place in this class of securities.

Unable, then, to see any sufficient reason why Tuttle and the Wakefields should not be protected as innocent purchasers in the premises, the majority of the court, for this, as well as other reasons above suggested, is disposed to affirm the judgment below.

Affirmed.

Dillon, J.

—In a case which has been three times argued, which involves so large an amount in value, and presents so many questions at once difficult and important, it is not surprising that different opinions should be entertained concerning the true grounds for its decision. In the view I take of it, I am not called upon either to concur in or dissent from tbe positions assumed in tbe very thorough and elaborate opinion of Mr. Justice Lowe.

6. Record-^aoknow-{supra]. I put my decision wholly upon one ground, viz.: that Tuttle and the Wakefields, the present owners of the property, had no notice, actual or constructive, of the trust deed of the plaintiff, and hence stand free from its operation. Were it not for the space already devoted to the case, I should examine it and set forth my reasons much more at length than under the circumstances would be proper. If the ground above stated is tenable, it disposes of the case; and that it is tenable, I proceed with all possible brevity to show, noticing nothing which does not lie- directly in the path of this inquiry.

It is beyond all dispute that Tuttle and the Wakefields, at the date of their purchase from Langworthy, August 1st, 1857, had no actual notice of the plaintiff’s deed of trust.

This the plaintiff substantially admits or scarcely denies, but he claims that they had constructive notice of his trust deed.

The learned counsel for the plaintiff, in view of the prior decisions of this court, admit that the acknowledgment to the trust deed, in consequence of the omission of the word “voluntary,” is fatally defective, and did not authorize it to be recorded.

This, as against Tuttle and the Wakefields, who are purchasers for value and without actual notice, is obviously an end to tbe plaintiff’s case, unless this defect has been cured or obviated. That it has been thus cured or obviated, tbe plaintiff maintains upon two grounds, each of which it is necessary to consider, viz. :

t and 8. — Cul’fttlY6 &CÍ> 1. By the curative act of July 4, 1858. (Rev., § 2249.) This went into force nearly eleven months after Tuttle and the Wakefields purchased the property from ** tT a v Langworthy, received their deed and paid their money for it. Their rights were fixed at this time. They bad no actual or constructive notice (leaving out of view tbe question arising on tbe recitals in tbeir deed, and wbicb will next be considered) of tbe plaintiff’s lien. Tbeir title against tbe plaintiff was perfect for nearly eleven months after they received tbeir deed. It strikes me that it would be a monstrous and arbitrary act of injustice if by a law subsequently passed, tbe defendants, Tuttle and tbe Wakefields, could be divested of their rights. Directly against tbe plaintiff on this point, is tbe case of Brinton v. Seevers, 12 Iowa, 389, wbicb arose upon tbe curative statute under consideration. This bis counsel concede, but claim and have made an able argument to show that this decision is wrong. Tbe writer has examined tbe question with some care, and is satisfied tbe decision is right. That tbe legislature may give laws a retrospective operation in some cases, and even where private rights may be incidentally affected, cannot, in tbe absence of a specific constitutional prohibition, be denied. On tbe other band, it is equally clear that the legislature has no constitutional power arbitrarily to divest or take away tbe title or rights of an owner of property. Childs v. Shower, 18 Iowa.

Retroactive laws in furtherance of equity and good morals (Trustees of Cuyahoga Falls Real Estate Association v. McCaughy, 2 Ohio State R., 152); or just, reasonable and conducive to the public good (Goshen v. Stonington, 4 Conn., 209; 6 Id., 58; 7 Id., 319, 351); and which violate no rule or principle of justice or morality (Menger v. Wertman, 1 Pa. St. Rep., 218; Baugher v. Nelson, 9 Gill., 299; Sedgwick on Constitutional Law, 177, 202, 411, 412, 671), will be sustained. But not where they unjustly or unwarrantably interfere with tbe vested rights of property.

Thus, laws validating acknowledgments of femes covert, and others; tbe registration of ancient or other deeds; are sustainable against tbe gi'antors or their heirs or devisees. Watson v. Mercer, 8 Pet., 88; S. C., names reversed, 16 Serg. & R., 35; referred to by Gibson, Ch. J., in 1 Pa. St. Rep., 218, 223, as based upon moral obligation to convey; and see also Satterlee v. Matthewsen, 2 Pet., 380; Webb v. Den, 17 How., 576.

But, on the other hand, á law which vests in the issue of an illegimaté child, an estate which bad descended to the right heirs of the intestate, is invalid. Norman v. Heist, 5 Watts & Serg., 171; and see Lucas v. Sawyer, ante.

Let these suffice as samples of the two classes of cases. The principle is this, as- stated by the Supreme Court of Pennsylvania, in Monger v. Wertman, before cited: .Where the purchaser has paid for land, and the prior owner is consequently under a moral obligation to convey, the legislature may constitutionally give effect to this moral- obligation, against such owner, his heirs, widow, &c. “But I trust,” says Ch. J. Gibson, “ that we [the courts] shall never go further.”

Let us apply the principle to the case in hand.-

The curative act would be valid against Dyer, his widow, heirs, &e, because Dyer undertook, and his widow joined with him, to execute to Newman a perfect conveyance, for a valuable consideration paid, and they are under a moral obligation to do so. But I fail to see any conscientious or moral obligation resting upon the bona fide vendees of Langworthy, who have fully paid for the property, to allow Newman to have priority over them.

Thus far, then, standing alone upon the prior decisions of this court, which are in- part unquestioned, and which, so far as questioned, I have shown to be sustained by authority, as they undoubtedly are in reason and principle, Tuttle and the Wakefields stand free and clear from the plaintiff’s deed of trust.

The plaintiff, to obviate the defect in the acknowledgr ment of the trust deed, claims, this being his only other ground:

9. Notice : recilal in a deea. 2. That Tuttle and the "Wakefields had notice thereof, because of the recitals in the deed from Langwor-,7 , ,7 th/y to them.

Here it is especially to be noted that their deed does not recite the existence of the trust deed to Newman. But it does refer to the deed of release or reconveyance from Samuels, as trustee; and it is this latter deed, and this alone, which refers to the trust deed, and refers to it only for the purpose of stating that it is canceled and paid. So that the only instrument by which Tuttle and the Wakefields have notice of the trust deed itself, recites that the trust deed is no longer an operative and existing instrument.

I admit the proposition contended for by the plaintiff’s counsel, “ that a purchaser has constructive notice of everything which appears in any part of the deeds or instruments which prove and constitute the title purchased,” provided “ they are of such a nature that, if communicated directly to the purchaser, they would have operated as actual notice.” 2 Lead. Cas. in Eq., 3d edition, 168, 169; Le Neve v. Le Neve, and cases there cited. That is, this constructive notice can have no greater effect upon the purchasers than if Samuels, the trustee, had, during the negotiations for the purchase, verbally communicated to them the same facts, and those only, which are set forth in his deed of release. These facts are, that the property had at one time been conveyed to him in trust, but that this trust was satisfied, the debt being paid. So that the precise question is, if Samuels had made such a communication, would they, in law, have been bound to credit one part of the statement and discredit the other; to believe him when he stated that there had been a trust deed, and to disbelieve him when he, at the same time, stated that it was paid ?

Now, information of the existence of a lien upon property may come from three sources:

1. From others, strangers to the transaction. When this is tbe case, tbe purchasers cannot, in safety, resort to and rely upon tbe statements of the debtor, an interested party, that tbe debt is paid. It is bis duty in such cases to inquire further and from more authentic and trustworthy sources ; and, if practicable, it may be bis duty in some cases to resort to tbe lien creditor himself. Notes to Le Neve v. Le Neve, 2 Lead. Cas. in Eq., 3d edition, 159, 160, 161, citing Price v. McDonald, 1 Md., 403, 419; Hudson v. Warner, 2 Har. and G. 415; Russell v. Petreo, 10 Ben. Mon., 184; Hall v. Noble, 40 Maine, 459; Warner v. Scott, 11 Fost., 332.

If, therefore, in this case, tbe deed to Tuttle and the Wakefields had itself recited the existence of the trust deed, and no more, or if they bad received notice of it from other sources than Samuels, it does not follow that they could rely alone, to countervail the effect of such notice, upon the recorded deed of release, or upon Samuels’ statement that the trust deed was satisfied.

Again, information of the existence of a trust deed, or prior right, may come from the debtor or vendor himself. Suppose he informs the purchaser, pending his treaty, that there had been a mortgage upon the property, but it had been paid, or that he had before sold the property to another person, but the sale had been rescinded, the question has arisen in numerous cases, where the person receiving this information is bound to inquire further. That he is not, see Buttrick v. Holden, 13 Metc., 355; Center v. Blair, 4 Cush. 310; Rogers v. Jones, 8 N. H., 264; Jones v. Smith, 1 Hare, 431.

But that he is bound to inquire further, at least may be bound, will be seen by referring to the cases above cited from the Leading Cases in Equity.

From an examination of all of these cases, I am satisfied they do not really conflict, and that each case must be decided upon its own circumstances. But in the case at bar, tbe information to Tuttle and tbe Wakefields did not proceed from tbe debtor or andnterested party.

Again, information of tbe existence of a prior right may come from a disinterested source. And tbe rule in sucb cases is well stated by Judge Hare (2 Lead. Cases in Eq., 3 ed., 159), thus: “ Tbe general principle that no one is bound to suspect fraud or imposition, is unquestionably sound, and will protect tbe purchaser whenever tbe information on which be relies is communicated to him by a third person who is disinterested, or has shown no known or-assignable motive for suppressing part of tbe truth, while revealing tbe residue.” See Rogers v. Wiley, 14 Ill., 65; remarks of Trumbull, J., page 67; and of Wilde, J., 13 Met., 357. “ Tbe whole notice,” says Parker, J., 8 N. H., 269, “must be taken together.” If this is so where tbe information is communicated by a disinterested person, a fortiori, must it be so when communicated by tbe trustee named in tbe deed of trust? Why? I answer:

1. Because, be is not only disinterested, but tbe parties declare their confidence in him by bis selection.

2. If interested at all, trustees are usually interested, in feeling, at least, with the beneficiary or creditor. Why so ? For tbe reason, as we all know by our experience, that be, unlike trustees proper in other cases, is almost universally selected by tbe creditor. Tbe borrower is tbe slave0of the lender. Tbe lender, as was well observed on tbe argument, is “master of tbe situation.” He'therefore selects tbe trustee, a person in whom be has confidence. Samuels bad tbe confidence of Newman, not only at the date of tbe trust deed, but intrusted him with tbe note secured by the trust deed pending tbe purchase by Lang-worthy, and Samuels bad possession of tbe note, and to tbe attorney of Langwortby declared it to be paid.

3. The trustee has tbe legal title, so tbe authorities all hold. They are collected in 2 Am. Law Beg., N. S., 665. He bolds it, 1st, for tbe payment of tbe specific debt; and 2d, for tbe benefit of tbe grantor, if the debt is paid or anything is left. Id., 657. On tbe payment of the debt it is bis duty, and be has tbe power, to reconvey tbe property, and thus revest tbe title and satisfy the trust deed. In all my examination I have found no case, as applied to instruments of this class, which settles tbe question who should satisfy them of record, tbe trastee or beneficiary, or bow far, if at all, tbe latter, as against purchasers for value and without notice, would be bound by a fraudulent satisfaction or reconveyance by the trustee duly recorded. Certain it is, that a reconveyance by the trustee is tbe usual and appropriate, if not necessary, course. A satisfaction by tbe beneficiary would doubtless be good in equity; perhaps, under the modern view, also at law. There was nothing, then, in tbe fact that Samuels bad made a reconveyance which was of a nature calculated to excite tbe alarm or suspicion of tbe purchaser, but just the contrary.

If tbe recital in tbe deed of tbe trustee of tbe existence of tbe Newman deed of trust was of a nature to put tbe purchaser upon notice, tbe next recital, that it was paid, would reasonably disarm him. The same instrument contained bane and antidote; tbe one recital was neutralized by tbe other. Let it be noted that tbe exigencies of tbe position of Tuttle and tbe Wakefields do not compel them to seek shelter behind, or rely upon, tbe Samuels release. They claim nothing under it. They do not rely upon it to defeat tbe plaintiff’s trust deed. On tbe contrary, it is tbe exigency of Newman’s case which drives him to set up tbe Samuels release. It is only by and through this very instrument that be affects Tuttle and tbe Wakefields with notice of bis lien. He repudiates this act of Samuels, yet, strange to say, it is through this act, and this alone, that be can claim any relief as against tbe present owners of tbe property. If be wishes to avail himself of this act of his trustee, he must take it cum mere, the bitter with the sweet.

As the soundness of my opinion depends upon a series of propositions logically connected, and to some extent inter-dependent, I recapitulate them.

1. The present purchasers, Tuttle and the Wakefields, had no actual notice of the plaintiff’s trust deed.

2. They had no constructive notice.

(a) Because the trust deed was defectively acknowledged, and this defect was not cured by the act of July, 1858, as to the present owners.

(&) Because the recital in their deed did not refer to the trust deed, but simply to Samuels’ release. This release can operate as constructive notice to no greater extent, than if Samuels had actually communicated to them the same facts pending their negotiation. That when information of a lien comes from a disinterested informant, who at the same time states that it is no longer existing, the purchaser will not ordinarily be bound, acting in good faith, to inquire further. Much more is this the case where, as in this instance, the only information of' a prior deed of trust comes from a trustee in an ordinary deed, in the usual form and for the very purpose of saying and declaring that the trust is satisfied.

It is not to be inferred that, if the original deed of trust had been duly recorded or recited as being in existence in any of the title papers of the defendant, or if the present owners of the property had had independent actual notice of it, that they could have relied solely upon the Samuels release as a protection, if the trust deed was not in fact paid. Such a question would be very different from the one decided.

In conclusion, I remark that in the views above advanced I have the concurrence of all of the members of the court. But I am instructed by the Chief Justice to say that, while be concurs in an affirmance upon this ground, he, like the writer, does not wish to be committed to the chief ground presented in the opinion of Mr. Justice Lowe