Pringle v. Dunn

37 Wis. 449

• Court: Wisconsin Supreme Court
• Decided: January 15, 1875
• Status: Published

Opinion

Cole, J.

Before approaching the legal questions involved -in this case, it is necessary to determine a question of fact. And that is, Does the evidence show that the mortgage sought to be foreclosed was properly attested when first left at the office of the register, so as to entitle it to record ? There is considerable testimony in the case which tends strongly to prove that the mortgage had no witnesses when it was recorded. And the court found as a fact that the mortgage was not sub-scnbed by the witnesses, Baker and McFarlane, at the time of its execution and before it was transcribed upon the records and-entered in the general index, but was subscribed by these witnesses after it was recorded, and that it was not again recorded. This finding affirms one important fact which is much •contested by the defendants, which is, the genuineness of the signature of the witness A. J. McEarlane to the instrument. An attempt was made to prove, and it is argued that the evidence shows, that McEarlane never signed the mortgage, as a witness, and that his signature thereto is a forgery. On this point we will only make the remark, that we are satisfied from the evidence, and especially by an inspection of the writings themselves, of the authenticity of the signature. Whether the mortgage was subscribed by the witnesses at the time of its execution, and, before it was left at the office for registry, is a question of more doubt, upon the evidence. The testimony is quite strong and positive, that the mortgage had no subscribing witnesses when it was recorded. But this testimony is contradicted ; and, considering the circumstances attending the execution and delivery of the mortgage, we think the probabilities favor the' inference that the instrument was witnessed when it was left for record. According to this view, there was a mistake in transcribing the mortgage upon the record, by omitting the names of the witnesses. The weight of the evidence to our minds supports this inference or conclusion. It is to be observed that the mortgage is perfect and fair on its face, showing two witnesses. A strong presumption fairly arises from the instrument itself, that it was witnessed at the time of its execution. This presumption is not overcome nor repelled by the testimony offered to show that it was not witnessed at that time. In respect to the degree or quantity of evidence necessary to justify a finding that the subscribing witnesses signed the instrument after it was executed and recorded, the case would seem to come within the rule laid down in Kercheval v. Doty, 31 Wis., 478, where it is said: “ The proposition being to set aside or invalidate a written contract by evidence of a far less certain and reliable character than the writing itself, the greatest clearness and certainty of proof' should be required. It is like the cases where the object is to correct or reform a deed or other instrument on the ground of mistake, or to set aside or rescind it on the same ground; where the rule is, that the fact must be established by clear and satisfactory evidence.” The testimony offered to show that the mortgage was not witnessed when executed and before it was recorded, falls short of this rule. The fact is not established by clear and conclusive proof that it was not witnessed when executed. It would serve no useful purpose to go into a detailed discussion of the evidence upon this point, and we shall not do so. It is sufficient to say that, giving to the testimony offered to show that the mortgage was not witnessed before it was received for record, all the weight to which it is entitled, it fails to establish that fact in a clear, satisfactory manner.

Assuming, then, that the mortgage was witnessed when it was left at the office of the register to be recorded, the further important inquiry arises as to what effect must be given to the record as constructive notice to subsequent bona fide purchasers for value. This record was in this state. The entry of the mortgage was made in the general index book, but the full record of the instrument had no subscribing witnesses. And therefore the question is, Would such a record operate as constructive notice to subsequent purchasers for value, independent of any actual notice ? It is claimed by the counsel for the plaintiff that the record does and should' so operate, notwithstanding the mistake in the registration or recording of the instrument in extenso. This presents a question of no little difficulty, which must be solved by the application of general principles of law to the provisions of our statute.

It is a familiar rule, that an instrument must be properly executed and acknowledged so as to entitle it to record, in order to make the registry thereof operate as constructive notice to a subsequent purchaser. Says Mr. Justice Story: “Thedoctrine as to the registration of deeds being constructive notice to all subsequent purchasers, is not to be understood of all deeds and conveyances which may be de facto registered, but of such only as are authorized and required by law to be registered, and are duly registered in compliance with law. If they are not au-thorizecl or required to be registered, or the registry itself is not in compliance with the law, the act of registration is treated as a mere nullity: and then the subsequent purchaser is affected only by such actual notice as would amount to a fraud.’’ 1 Eq. Jur., § 404. See also Ely v. Wilcox, 20 Wis., 528; Fallass v. Pierce, 80 id., 444; Lessee of Heister v. Fortner, 2 Binn., 40; Shove v. Larsen, 22 Wis., 142, and cases cited on p. 146. Under our statute, among other requisites, two witnesses are essential to a conveyance, to entitle it to record. The statute requires every register to keep a general index, each page of which shall be divided into eight columns, with heads to the respective columns as prescribed; and the duty is imposed upon the register to make correct entries in said index of every iustrument received by him for record, under the respective and appropriate heads, and immediately to enter in the appropriate column, and in the order of time in which it was received, the day and hour of reception; and it is declared that the instrument “ shall be considered as recorded at the time so noted.” R. S. ch. 18, secs. 142, 143. In Shove v. Larsen, supra, the effect of this index containing correct entries of matters required to be made therein was considered. And it was held that by force of the statute it operated as constructive notice to a subsequent purchaser.. In that case the index contained an accurate description of the land mortgaged, but, in transcribing the mortgage at large upon the records, a mistake was made in the description. And it was claimed in behalf of the subsequent purchaser, that it was the registration of the instrument at large which alone amounted to constructive notice. But this construction of the statute was not adopted, the court holding that a subsequent purchaser was bound to take notice of the entries in the index, which the law required the register to make. This result seemed to follow necessarily from the language of the statute, which declared that the instrument should be considered as recorded at the time noted. Time might elapse before the instrument was transcribed at large on the record, or It might be lost and not transcribed at all, leaving the index the only record of its contents. And the manifest intention of the statute seemed to be to make the index notice of all proper entries from its date, and also of' the instrument itself till it was registered in full. The further consequence would seem necessarily to result from this view of the statute, that the registration of the conveyance in extenso relates back to the. registration in the index, and from thence there is constructive notice of the contents of the instrument. The doctrine of Shove v. Larsen was approved in Hay v. Hill, 24 Wis., 235 ; but the court refused to' make the entry in the index in that case operate as constructive notice, because upon its very face it bore conclusive evidence that it was not made at its date. In other words, the rectitude and integrity of the index were successfully impeached by the index itself. See also International Life Ins. Co. v. Scales, 27 Wis., 640. Where there is nothing upon the face of the index to impeach- or throw suspicion upon its accuracy, there it would affect a subsequent purchaser' with notice of those facts which the law required to appear therein. Doubtless a still further consequence follows from this construction of the statute, namely, that where by some mistake there is a discrepancy between the proper index entries and the instrument as registered, there each supplies the defects of the other in the constructive notice thereby given. That is, it appears to be the intention of the statute to charge the subsequent purchaser constructively with such knowledge as the proper index entries afford, as well as with notice of those facts derived from the registration itself. He is presumed to have examined the whole record, and is affected with notice of what it contains. But when the instrument, as registered in full, appears defective in some material and essential parts which are not supplied by the index entries, what effect then must be given the record as constructive notice? This is really the difficult question in this case. From the entries in the index it would not appear whether the mortgage was witnessed or not. The presumption from the mere entries themselves -would be, that it was witnessed and acknowledged so as to entitle it to record. But when the mortgage as registered in full was examined, it would be found that it had no witnesses and had no business on the records. As the record itself is only constructive notice of its contents, it is difficult to perceive how it can go beyond the facts appearing upon it, and charge a purchaser constructively with knowledge of a fact not in the record.

One of the counsel for the defendants states the argument on this point as follows: He insists and claims that the entries in the index book, so far as they indicated that the mortgage had been filed for record, indicated also that the mortgage was so executed as to entitle these entries of it to be made; but that when the full record was looked at for all the particulars of the mortgage, and perhaps for the express purpose of verifying the entries in the index,- it is found that the apparent' assertion by the index entries that the mortgage was properly executed was wholly untrue, and that the mortgage in fact was no incumbrance. The fact, as truly shown to exist by the full record, overcomes and destroys the false assertion as to the fact in the index. And it appearing by the instrument registered that it was not entitled to record, both the registration and index itself cease to affect the purchaser with constructive notice.

It is not readily perceived wherein this argument as to the effect of our various provisions upon the subject of registration is unsound. The question -mainly depends upon the construction of our own statutes. So far as we are aware, this is the first time the point has been presented in this court for adjudication. We have derived but little aid from the decisions-in other states, for the reason that few of them have similar statutory provisions. We have been referred by the counsel for the plaintiff to two cases in Michigan, Brown v. McCormick, 28 Mich., 215, and Starkweather v. Martin, id., 472. In Brown v. McCormick the effect of the registry, as notice to subsequent purchasers, was made to turn upon the curative act of 1861, mentioned in the opinion. In Starkweather v. Martin the question was, how far the absence, on the registry of a deed, of any mark or device indicating a seal, or of any statement of the register that' the original was sealed, affected the validity of the record entry as evidence of title. The record entry of the deed was made more than forty years before the cause was decided, by the proper ófficer, and in the appropriate place for the registry of deeds, under the law permitting the registry of only sealed instruments; and the instrument was in the form of a warranty deed, purporting to be acknowledged and dated at a time when it was the common and lawful course to seal conveyances, and contrary to official duty to take the acknowledgment unless the conveyance was sealed, and where the conclusion, attestation clause, and certificate of acknowledgment of the instrument all spoke of it as under seal. The court said that these facts and incidents taken together afforded a very strong presumption that the original was sealed.

The doctrine of this case does not seem to have a very strong bearing upon the question under consideration. It may be said that it was contrary to the duty of the register to record the mortgage unless it was properly acknowledged and witnessed, and that a presumption arises that he would not have done so. But in answer to this it may also be said that the law made it the duty of the register to record, or cause to be recorded correctly, all instruments authorized by law to be recorded. Sec. 140, ch. 18, R. S. 1858. And the presumption that he performed his duty in recording the mortgage correctly, is as strong as the presumption that he would not have recorded it unless it was entitled to registry.

In Shove v. Larson, a number of cases are referred to which hold that a mistake in recording a deed, or recording it out of its order, renders the registration ineffectual as notice to subsequent incumbrancers and purchasers. The doctrine of those, cases would seem to be applicable to the case before us. The registration and index entries being incomplete, because showing that the mortgage had no subscribing witnesses, constructive notice could not be presumed of such a record. Eor the principle “ that the registry is notice of 'the tenor and effect of the instrument recorded, only as it appears upon that record,” fully applies. Shepherd v. Burkhalter, 13 Ga., 443. See, in addition to the cases cited in Shove v. Larson, Brown v. Kirkman, 1 Ohio St., 116; Stevens v. Hampton, 46 Mo., 404; Bishop v. Schneider, id., 472; Terrell v. Andrew Co., 44 id., 309; Frost v. Beekman, 1 Johns. Ch., 288.

The question then arises, whether the evidence shows that any of the defendants were affected with actual notice of the mortgage. This question, we think, must be answered in the affirmative, so far as the defendants Thomas Maloy and Stanis-laus Bartosz are concerned.

In the deposition taken on his own behalf, but read as a part of the plaintiff’s case, Thomas Maloy distinctly admits that he had heard, when he purchased his lots, that there was a defective railroad mortgage upon them, but that he did not look for it, because his abstract did not show it. It is claimed by one of the counsel for the defendants, that this related to the Aiken mortgage, and not to the one upon which this action is brought. It seems to us, however, that this is a totally inadmissible construction of the testimony. He most certainly refers to the mortgage in suit. And what he had heard about there being a defective railroad mortgage upon the property, was sufficient to put him upon inquiry. Parker v. Kane, 4 Wis., 1. “ What is sufficient to put a purchaser upon an inquiry is good notice; that is, where a man has sufficient information to lead him to a fact, he shall be deemed conusant of it.” Sugden on Vendors, p. 335, 9th London ed. “ In regard to the inquiry required of a party, it should be such as a prudent and careful man would exercise in his own business of equal importance. Accordingly, where the mortgagee is informed that there are charges affecting the estate, and is cognizant of two only, he cannot claim to be a purchaser without notice of other charges, because he believes that the two, -which satisfy the word charges, are all the charges upon it. He is bound to inquire whether there are any others. The rule with respect to the consequences of a purchaser abstaining from making inquiries does not depend exclusively upon a fraudulent motive; a man may abstain from mere heedlessness, or stupidity, and be none the less responsible for the consequences; but if he make reasonable inquiry, and is deterred by a false answer, he is excusable, if it be of a character to delude a prudent man.” 1 Story’s Eq. Jur., § 400 b; Jackson v. Van Valkenburgh, 8 Cow., 260. Independently of the record, Maby had notice of the existence of the mortgage, or had a knowledge of such facts as to call for further inquiry. He cannot, therefore, be protected as an innocent purchaser for value.

The defendant Bartosz must be charged with notice of the mortgage by the recitals in the deed from Tenney and wife to his immediate grantor. He was present when that deed was executed and delivered to his uncle. He testifies that he did not know whether anything was said about the railroad mortgage at that time or not; that he did not understand English very well. The purchase was really made by his uncle for him. And whether he fully understood the conversation at the time about incumbrances, he must be chargeable with notice of what appears in his chain of title. This clause was in the deed to his uncle: “ Said premises are free and clear from all incum-brances except a mortgage to the La Orosse Railroad Co., which I am to save said Bartosz harmless from.” The general rule upon this subject is, “ that where a purchaser cannot make out a title but by a deed which leads him to another fact, he will be presumed to have knowledge of that fact.” The following authorities are very clear and decisive upon that point: Fitzhugh v. Barnard, 12 Mich., 105; Case v. Erwin, 18 id., 484; Baker v. Mather, 25 id., 51; Howard Insurance Co. v. Halsey, 8 ; Frost v. Beekman, supra, p. 298; Gilbert v. Peteler, 38 N. Y, 165; New v. Westcott, 46 id., 384; Coles v. Sims, 5 De Gex, M. & G., 1. The clause in the deed referred to the mortgage as an existing incumbrance, and he cannot now in good faith claim that it is not a lien upon his property.

The counsel for the plaintiff claims that the defendant McLindon had actual .knowledge .of the existence of the mortgage. It is true, he testified that when he purchased, he knew by report that there was a railroad mortgage upon the' property, but he says that the report stated that the mortgage was void. Were he,not protected by another principle, he could not certainly be regarded as a bona .fide purchaser. But he purchased from S. S. Johnson, or claims through Johnson, in whom the title stood free from any taint. For the rule is well settled, that a purchaser affected with notice may protect himself by purchasing of another who is a bona fide purchaser for a valuable consideration. For a similar reason, if a person who has notice sells to another who has no notice and is a bona fide purchaser for a valuable consideration, the latter may protect his title, although it was affected with the equity arising from notice in the hands of the person from whom he derived it. Mr. Justice STORY says this doctrine, in both of its branches, has been settled for nearly a century and a half in England. 1 Eq.. Jur., § 410. He states an exception to the rule, .which was recognized and enforced in Ely v. Wilcox, 26 Wis., 91, where the estate became revested in the original fraudulent grantee, when the original equity was held to reattach to it. There is no pretense that McLindon comes within the exception ; and as a bona fide purchase of an estate, for a valuable consideration, purges away the equity from the estate in the hands of all persons who derive title under it, he is protected. It is said that it does not appear that Johnson’s title was derived from the common source. As we understand the bill of exceptions, an abstract ‘was offered in evidence to show title from Dunn, by various intermediate conveyances, to the defendant, which was ruled out on the plaintiff’s objection. But perhaps it is a better answer to the objection to say that the plaintiff has made the defendants parties under the general allegation that they claim some interest in or title to the mortgaged premises, which was subject to the mortgage. This allegation implies that this interest was not a,dverse, but was derived from Dunn, though subsequent in date and inferior in right to the plaintiff's mortgage.

It was further insisted that the evidence showed that the defendant Mary Maloy had actual notice of the mortgage. We do not think this position is sustained by the testimony. It is attempted to charge her with the same actual knowledge her husband had, because he aided her when she made her purchase of Martin Maloy. It does not appear that anything was said at this time about the railroad mortgage, or that she ever had any notice of it. It does not appear, even, that he was acting as her agent in any legal sense; and besides, if he were, his knowledge acquired at another time, when not engaged in her business, ought not to be imputed to her. Notice, to bind the principal, should be brought home to the agent while engaged in the business or negotiation of the principal, and when it would be a breach of trust in the former not to communicate the knowledge to the latter. 1 Story’s Eq. Jur., § 408, and cases cited in note 1. The evidence fails to bring her within that rule.

A number of other questions were discussed upon the argument ; but we believe these observations dispose of all the more important ones.

The judgment of the circuit court as to the defendants Thomas Maloy and Stanislaus Bartosz must be reversed, and the cause remanded for further proceedings in accordance with this decision.

By the Court. —■ It is so ordered.