Walker v. Gilbert

1 Free. Ch. 85

Opinion

The Chancellor.

This case was submitted at a former day, upon motion to dissolve the injunction therein, on-bill and answer. The whole merits of the case arise upon the motion. The only allegations of the bill which I deem it material to notice, are those which state that the complainant became the accommodation indorser for Puckett and Fall, on a note which they gave for the purchase of a lot in the town of Madisonville, the title to which was derived indirectly through John S Gooch; that Gooch, in May, 1836, sold and conveyed to Walker and Williams; they sold and conveyed to Josiah Borrough; he sold to Enloe Johnson & Co., and they sold to Puckett and Fall. That the deed from Gooch to Walker and Williams, although placed upon record, was not acknowledged and certified in the manner prescribed by law, and was not. therefore notice to creditors or purchasers. That C. Marsh & Co., having subsequently obtained a judgment against Gooch, caused an execution thereon to be levied on said town lot, under which the same was sold. This sale, it is alleged, divested the title of Puckett and Fall, and consequently produced a failure of the consideration of their note indorsed by the complainant. That suit was instituted on that note, and a judgment obtained, which is threatened to be made out of the complainant’s property. That the writ was returned “executed” as to him, but he alleges that he was not served personally with process, and that if a copy was left at his house, he never heard of it. That he was thus prevented from making his defence at law, and prays for a new trial at law, or a perpetual injunction against the judgment.

The answer of the defendants denies that the complainant had not notice of their suit, and say that the officer’s return shows service of process, which they state was actually made, as they will be able to show. They state that the judgment under which the lot was sold, had, they believe, been satisfied, and that the complainant knew it. That he was active in effecting the sale, and bought the lot for a trifle. That Puckett and others had, and continued to have the undisturbed occupancy of the lot in question.

The allegation that the complainant had no notice of the pen-dency of the suit at law, not being disproved by the answer, is, I think, sufficient to entitle him to come to this court for relief, provided he shows that he has a substantial and meritorious defence against the judgment at law. This must depend upon the fact whether the creditors of Gooch, under whose judgment the town lot was sold, had actual or constructive notice of the prior conveyance made by him to Williams ánd Walker, and upon the effect of that notice. The certificate indorsed upon the deed simply states that it was “acknowledged” by Gooch before a justice of the peace, who signs the same. This falls far short of complying with the requirements of the statute upon that subject, which provides that the judge or justice taking the acknowledgement shall certify that the grantor acknowledged that he signed, sealed, and delivered the same, on the day therein mentioned, as his act and deed, and that no deed shall be recorded unless acknowledged and certified in the manner directed by the act. Howard and Hutch. Dig. 344, sec. 7.

It is manifest that the deed was not “so acknowledged, and certified" as to admit to record within the act referred to. The fact, therefore, that it was admitted to record avails nothing, in legal contemplation, in the way of communicating notice. I say, in legal contemplation, for it is difficult to say why such a deed, spread at large upon the records of the country, would not as effectually give notice of the fact of its existence as though it had been formally and technically certified. To any but a prying, technical conveyancer, who looks through legal glasses, such a requisition would convey fully and completely the idea of the existence of a prior conveyance. If the question were a new one, 1 should be strongly inclined to hold that a mere defect or informality in the certificate of a deed which had been registered, did not divest it of its legal attributes. It is not the less a deed at common law, as between the parties, because of the want of a formal certificate, as between them it need never be certified or recorded. I should have held, the purpose of recording a deed was to communicate notice of the fací of its existence, and not of its technical and legal structure. I should have held that there was a. material distinction between the effect of recording a defective writing required to be recorded, and recording a perfect one not so required. The one would give notice; the other would not. The attention of the purchaser would be called to the first, because the public records are its proper depository, whilst no such reason'would guide him in searching for the latter.

But it is said that the existence of a deed can only be made known through registration by complying .with the prescribed forms o'f the law. And it, perhaps, ill becomes' me to question the policy of a rule which has received the sanction of some of the ablest jurists of the United States. The rule would seem how to be settled, that a deed unduly registered either from the want of a valid acknowledgment or otherwise, is not notice. Carter v. Champion et al., 3 Conn. Rep. 549; Hester v. Fortner, 2 Binn. Rep. 40; 3 Cranch, 140; 1 John. Ch. Rep. 300.

The deed, in this case, from Gooch to Williams and Walker must be considered as an unregistered deed. It becomes important next to inquire what effect notice to a creditor of an unregistered deed has upon his rights, and what is evidence of such notice. These are important questions, and I regret that the statute upon which they depend has, so far as I know, received no judicial construction at the hands of the High Court of Errors. That statute provides, “That all sales and conveyances of land shall be void as to all creditors and subsequent purchasers, for valuable consideration, without notice,” unless acknowledged and recorded in the manner prescribed by the act. Howard and Hutch. Dig. 343, sec. 3. Under this statute it is insisted that the question of notice does not apply to a creditor, and that he is not aflected with notice of an unregistered deed from his debtor. I am unable to find any thing in the language, reason or policy of the law sustaining such construction. But whether the statute does, in terms, apply notice to creditors or not, makes but little difference in this case, from the view which I take of its legal bearing and effect. The statute has exclusive relation to the modes and forms of conveying the legal estate in lands. It therefore concerns legal estates only, and does not touch the equity of the parties, but leaves that where it would stand at common law, with reference to a party having notice of it. The clause in the act referred to says: “The deed shall be void as to all creditors and subsequent purchasers,” &c. That is, it makes the legal title remain with the grantor of an unregistered deed, to the extent of enabling him to pass it to a subsequent purchaser, or to subject it to his creditors; but it does not declare .that they take it exempt from the prior equity of the first purchaser. It simply takes away the legal priority of the grantee of the unregistered deed over the general creditor, but leaves the prior equity untouched. A deed, for instance, may be so defective as not to pass the legal estate, and would not therefore be the, proper subject for registration, but would yet create an unquestionable estate in equity in the grantee, which a court of chancery would protect against a subsequent judgment creditor having notice thereof. The statute operates upon none other than deeds conveying the legal estate. A deed, therefore, conveying a mere equitable estate is not within its provisions.

The truth of the position is shown by repeated decisions that the registration of a deed, conveying a mere equitable title, is not notice to subsequent purchasers, not being the kind of conveyance referred to by the Statute of Registration. Halsted v. Bank of Kentucky, 4 J. J. Marsh. Rep. 558; Frost v. Beckman, 1 J. Ch. R. 300. The Statute of Registration of the 7th of Anne, ch. 20, is much stronger than ours, as it makes all unrecorded deeds void as to subsequent purchasers, without any saving in case of notice. Cruise’s Dig. part 4, 368-9. Yet Lord Hardwicke said, in reference to that statute, that it had regard only to the legal' estate — that it did not take away the equity of the prior incumbrancer, but left that question still open as to him. 3 Atkins, 646; Cruise’s Dig. part 4, 378. I incline to the opinion, therefore, that it is immaterial to the protection of the holder of an unregistered deed whether the statute is held to apply as notice to creditors or not, provided he can show that the judgment creditor had notice. I think it is sufficiently shown in this case, by the statement in the pleadings, that Gooch’s vendee went into possession of the lot in controversy under his unrecorded deed, and that he, and those claiming under him, held that possession at the time of obtaining the judgment under which it was sold. This, I think, is sufficient.

The possession of land by the vendee under an unregistered deed, is such evidence of title as amounts to constructive or implied notice to creditors or subsequent purchasers; 3 Mass. Rep. 575; Priest v. Rice, 1 Pick. Rep. 164; Tuite v. Jackson, 6 Wend. 213, and authorities there cited. So in Colly v. Kenniston, 4 New Hamp. Rep. 262. While the purchaser under an unregistered deed was in open and visible possession, it was held sufficient notice to protect him against a subsequent purchaser, and to charge the latter with a knowledge of his rights. In Norcross v. Wedgery, 2 Mass Rep. 500, Chief Justice Parsons says — “This notice may be express, or it may be implied, from the first purchaser being in the open and exclusive possession of the estate under his deed.” The English Courts have held similar language in reference to the question of notice under their registry acts; Sheldon v. Cox, 2 Eden’s Rep. 228. The only object of the statute of Registration is, to supply the place of the ancient ceremonial of livery of seisin, or in other words, to give notice to all who may become interested, of the change of ownership and title to the estate conveyed. And whenever the notice is actually or impliedly communicated, although through other mediums, the whole object and purpose of the statute is as fully attained as if the notice had been derived from actual inspection of the public Records. The plain object of the statute is to secure creditors and subsequent purchasers against prior secret conveyances. This is the judicial construction which has been given to every statute of Registration from that of the 7th of Arm, ch. 20, down to the present time, and is so perfectly consonant to the spirit and object of such statutes as to render it useless-to cite authorities in support of it. The case of Le Neve v. Le Neve, 3 Atkins, 646, decided by Lord Chancellor Hardwicke may be regarded as the leading case upon the subject. If therefore a creditor, at the time when he obtains his judgment, has notice that his debtor had previously conveyed his estate to another by an unregistered deed, this notice places him, in the contemplation of a court of equity, in the same situation in regard to that deed, as if it had been duly registered. It is true that the legal estate as to such creditor is still considered to be in the grantor, but having notice of the prior equitable title of the grantee under the unregistered deed, a court of equity will protect that title against the effects of the judgment. I take it to be a well settled law, that the lien of a judgment creditor upon the lands of his debtor, is subject to all equities which existed in favor of third persons against such lands at the time of the recovery of the judgment, and a court of chancery will limit such lien to the actual interest which the judgment debtor has in the estate; Kiersted et al. v. Avery, 4 Paige, Ch. Rep. 9; in the matter of Howe, 1 Paige, ch. 128. In the case of Martin v. Robards et al. A Dana’s Rep. 258, the supreme court of Kentucky held that an equitable title to land, created by an unregistered deed, would prevail against the legal title of a purchaser under an execution, who had notice of that equity, that the judgment under which he purchased covered nothing but' the legal estate of the first grantor, and left the equity of the first purchaser unaifected. This case is a direct authority for the one now before me, and I refer to it as presenting an able exposition of the doctrine upon this subject. The case of Priest v. Rice, 1 Pick. Rep. 164, is not less in point. It lays down the rule that there is no distinction as to the question of notice between a creditor and subsequent purchaser. Chief Justice Parker says: “ The reason is the same in both cases, for if a creditor where debt is due, will stand by and suffer his debtor to sell his land and receive the value of it from one who knows not of his claim nor of his intention to.bring an action upon it, and will afterwards attach the same land, there is a constructive fraud upon the first purchaser which ought not to prejudice his title. The execution and delivery of the deed completes the transfer from the grantor to the grantee; the registry is to give notice, that others may not be prejudiced. Actual notice is, to the person affected by it, as useful and ought to be attended with the same consequences as public notice in the registry, and implied notice arising from possession under the deed is as effectual as actual notice.” See also Brown v. Marine Bank, 11 Mass. Rep. 158, sustaining the same view; and Campbell v. Morely, Littell’s Select Cases, 358. In the case referred to in 4 Dana, the reasoning of Justice Ewing upon the rights of a creditor against an unrecorded deed are to my mind conclusive. He says, “Though our statutes postpones or annuls the legal title acquired by an unrecorded deed in favor of creditors, it gives to the creditors’ demands no higher' dignity or greater efficacy than they had before. It neither gives, nor was intended to give to the creditor, any lien or equity upon the property of the debtor, which he had not by the terms of his contract. No promise is made to him, that he shall have a lien, either legal or equitable, on the specific property embraced in ah unrecorded deed, or that he shall have the privilege of making his debt out of lands thus situated. This would be to promise him what he had not secured by his own contract, and what the Legislature would perhaps have no constitutional power to afford. But the statute has promised him to sweep away the legal obstruction-which the holder of an unrecorded deed has placed in his way, (4$) and to enable him to gain the vantage ground which a legal title would afford him in a contract with the prior encumbrancer." The case before me presents a striking instance of the injusti|i which the construction contended for by the complainant is calcus dated to produce. It would, it seems to me, effectually overturn-the very purposes for which the statute was enacted. It was intended to give certainty and stability to the titles to the real estate of the country, and to prevent fraud in their transfer. Here the unregistered, or rather defectively registered deed from Gooch to Walker and Williams, was made in May, 1836; the judgment-under which the lot was sold was obtained some six months after, and was not levied until upwards of four years after the date of Gooch’s deed, and until the land had passed successively through the hands of some three or four purchasers, each relying upon having obtained a. good title. To apply the statute to such a case, would be a perversion of its spirit; instead of preventing fraud, it would work the grossest injustice and oppression. It would set every hungry creditor who has an insolvent debtor to raiding over the musty records of the country, to see if he could not make a victim of some honest but incautious purchaser, who, from accident or forgetfulness, had neglected to place his deed upon record, or who as in this case had failed to have his deed rightly certified from the ignorance of the officer taking the acknowledgement. Such a construction, instead of giving security and quietude, would unsettle half the estates in the country, and establish an active trade in the business of champerty and maintenance. I know it has been said that supposing the question of notice to apply to a creditor, that yet to make an unregistered deed available against him, he must have notice of it at the time when his debt was contracted, and not when his judgment is obtained. I do not readily perceive the force of this position. A party, to be entitled to notice, must have some rights that may be affected by the act of which he requires notice. The law is not chargeable with the folly of requiring notice, when that notice can avail nothing. It is difficult to conceive what right or interest the holder of a promissory note has to claim notice from the maker, that he has aliened his land. A creditor at large and before judgment, has no claim )to, nor right nor lien upon, the land of his debtor. It would be idle therefore to require notice to him, of an act which could in no way affect his rights, and which he could not, in any manner, make available in securing his debt. If the construction referred were correct, it would seem to follow, that a general creditor might come into this court, to set aside as void, an unregistered deed from his debtor, which surely could not be done. I am of opinion then, that the judgment of Marsh & Co. v. Gooch, was not a lien upon the lot in question; that the sale under it did not divest the title ofPuckett and Fall, and consequently that there has been no failure of the consideration of their note, the collection of which . the complainant as their accommodation indorser has enjoined.

The injunction must accordingly be dissolved.