Williams v. Beard

1 S.C. 309, 1870 S.C. LEXIS 39

• Court: Supreme Court of South Carolina
• Decided: March 23, 1870
• Status: Published

Opinion

The opinion of the Court was delivered by

Moses, C. J.

The plaintiff, James W. Williams, on the 26th day of January, 1859, sold and conveyed a certain tract of land, situated in Abbeville County, consisting of 2,250 acres, more or less, to Henry Beard, one of the defendants, taking from him, for the purchase money, his bond, with sureties, payable in four equal annual installments, and a mortgage of the premises, which mortgage was not recorded until 27th June, 1866.

On March 7, 1859, the said Beard sold and conveyed to James M. Richardson l,492f acres of the said land. He entered, and has since held possession by himself and son, (except as to some small parcels, which he sold,) paying part of the purchase money in other lands, (transferred, by directions of the said Beard, to third persons, he (Beard) realizing the consideration therefor in securities accepted by the said Beard,) and in his own note for the balance, which was settled in full before January, 1864. The deed was 'not recorded until the 20th day of November, 1866.

To John W. Calhoun, the said Beard, on the 6th day of April, 1859, sold and conveyed 43 acres of the said land, for $860, which was paid in March, 1863. The deed was not recorded.

To Joel M. Pinson, the said Beard, in 1859, sold and conveyed 124f acres of the said tract, and received full payment. The deed conveying the same was not recorded.

Elizabeth Day and Frances Sheppard, (whose answers detail facts similar to those set forth by the said Richardson, Calhoun and Pinson,) with the last named defendants, claim that they are subsequent purchasers for valuable consideration without notice, and deny the right of the plaintiff to subject their land, by foreclosure of the mortgage or otherwise, to the payment of the bond of the said Beard, given for the real estate so to him sold and convoyed.

Assuming, for the present, that the defendants bought without notice of the mortgage to Williams, the question is presented, whether a mortgage not recorded within sixty days, but recorded before subsequent conveyances from the mortgagor of the same land were recorded, has priority over such conveyances, or can prevail against them, even if not recorded.

It would be a matter more of interest and curiosity than of practical utility, to consider, here, the numerous decisions under our registry laws. An examination of them might render it difficult to reconcile the apparent conflict which some of them present, with previous opinions on questions in which there appears to be no dissimilarity. The Courts of this State have certainly held, in regard to instruments executed before the Act of 1843, (which will be hereinafter referred to,) that the registry laws of force in the. State are the result of the joint operation of the Act of 1698, (2 Stat., 137,) and the 45th Section of the County Court Act of 1785, (7 Stat., 232,) and have, accordingly, given effect to the conveyance first recorded, without regard to the time, as against creditors and subsequent purchasers for valuable consideration without notice.— Steel vs. Mansell, 6 Rich., 437.

If we did not consider ourselves bound by the current of authorities which have established this rule — in itself one involving rather a matter of practice and direction than of principle — we might feel at liberty, having in view the Act of 1789, (5 Stat., 127,) which gives legislative construction to the Act of 1785, to hold that it was not to be construed in connection with that of 1698, as if the two were to be understood as one enactment, but that it was intended as a substitute for it, and, by necessary implication, repealed it. So far, therefore, as the cases have established a system where the rule applies, it is not our purpose to weaken or impair its effect.

The question, however, with which we have to deal is, in our judgment, affected by neither of the said Acts, unless we can be persuaded, by the argument, to hold that the Act of 1843, (11 Stat., 256,) was intended by the Legislature to compel no change, and must be construed with reference to the former Acts, only adding another to the structure, which was in no way to destroy the symmetry of the whole.

That Statute, by its first Section, enacts “ that no mortgage, or other instalment of writing in the nature of a mortgage, of real estate shall be valid, so as to affect the rights of subsequent creditors or purchasers for valuable consideration without notice, unless the same shall be recorded in the office of the Register of Mesne Conveyance for the District wherein such real estate lies within sixty days from the execution thereof.”

The second applies to like instruments of personal property, requiring, in one particular, a registry, also, in the office of Secretary of State; and the third repeals “all Acts, and parts of Acts, in relation to mortgages, repugnant to this Act.”

■ It is contended that, notwithstanding this peremptory language, by which validity is denied to any mortgage, unless recorded within the time prescribed, so far as concerns the rights of subsequent creditors or purchasers for valuable consideration without notice, effect is to be given to the mortgage of the plaintiff, because, under the Act of 1698, “thesale, conveyance, or mortgage first recorded, shall be taken, adjudged, allowed and held good, firm, substantial and lawful in all cases,” &c.

Was the Act of 1843 only to operate on that of 1785, by restricting the time within which such instruments were to be recorded, and reducing the limit from sis months to sixty days ? This we must hold, to give countenance to the position assumed by the plaintiff. If such only had been the intent of the Legislature, its end could more readily have been reached by a-plain and express enactment to that effect. The language of the Act is of a different character, and has a wider aim. It declares that no mortgage shall be valid, as against subsequent creditors or purchasers for valuable consideration without notice, unless recorded within sixty days, and repeals all Acts repugnant to it. Does the Act of 1698, on which the plaintiff relies for his support, in its main feature, exhibit no repugnance to that of 1843 ? The Act of 1698 makes “lawful” the mortgage first recorded; that of 1843 withholds from force or validity any mortgage not recorded within sixty days, as against the rights of creditors or subsequent purchasers for valuable consideration without notice. So far from sustaining the mortgage first recorded, it declares that no mortgage shall be valid, as to, &e., unless recorded within the time prescribed by it. If the said Act was not intended, in view of the previous decisions of the Court, to introduce a direct and important change in the registry system, it would be in vain for the Legislature to express its will beyond the reach of doubt or controversy.

In Youngblood vs. Keadle, 1 Strob., 130, Wardlaw, J., says: “Our Act of 1843, concerning the recording of mortgages, has so altered the law that many cases are not likely to occur to which the decision’now made will be exactly applicable.”

In the very case of Steel vs. Mansell, the same Justice says, at page 447: “Even the Act of 1843 leaves for future discussion difficult questions, concerning mortgages, which preceded the date assigned for its going into operation, and those that may have been recorded after the prescribed time, but before opposing rights occurred.”

It is, at least, not a forced conclusion to say, that this eminent jurist saw that a most effectual alteration had been made in the system, by the Act of 1843, but which could have no application to the subject he was considering, because the instrument then before the Court was executed previous to its passage.

The Act of 1843, as we have seen, uses, in reference to mortgages of personal property, the same language (with an immaterial exception) which it employs in relation to those of real estate. The case of McKnight vs. Gordon, 13 Rich. Eq., 222, is only distinguishable from the one before us, by the fact that there the mortgage under which the pakty claimed had never been recorded. The opinion of the Court very clearly intimates the application which it would make of the Act of 1843, if the instrument, though recorded, was not-recorded within the limited time. In the course of the full opinion pronounced by the learned Justice Inglis, at page 232, he expresses his judgment on the very point we are considering, when he says: “But the positive rule of law, established by this statute, precludes the mortgagee, who has omitted to put his mortgage on record within the time limited, from interposing the estate which he acquired by it, in bar or derogation of the estate or claim for which one who is within the terms of its protection has paid.”

Our judgment concurs with that of the Chancellor below, in refusing to give the effect claimed to the plaintiff’s mortgage.

It is submitted, however, by the first ground of appeal, “that the mortgagor, having sold the larger part of the land mortgaged, and parted with the possession thereof, the Act of 1791, (5 Stat., 178,) which changes the rule of the common law, vesting the fee in the mortgagee, does not apply, and, as to all the lands in the possession of the defendants, other than Beard, on forfeiture of the mortgage, by non-payment of the money secured by it,' the legal title, and the right of possession, were in the said plaintiff, Williams; against which title the pleas of the respective defendants, Richardson, Day, Calhoun, Sheppard and Pinson, of subsequent purchasers for valuable consideration without notice, cannot avail.”

At common law the mortgagee was held seized of the legal estate. In equity, however, he is considered as having a transfer of the property itself, as a security for the debt, and, according to the intention of the parties, a qualified estate and security. — Story, J., in Conard vs. Atlantic Insurance Company, 1 Pet., 441.

In modern times, the doctrine of the Court of Equity, recognizing the mortgagor (until foreclosure) as the actual owner of the land, has, to a certain extent, in reference to the possession by the mortgagor, been acted upon by the Courts of common law. — 1 Coote, 325.

Chancellor Kent, in the 4th volume of his Commentaries, at page 159, says: “The equity doctrine is, that the mortgage is a mere security for the debt, and only a chattel interest; and that, until a decree for foreclosure, the mortgagor continues the real owner of the fee.” See, also, 2 Story’s Eq., §§ 1015, 1016.

It is contended, however, that, although the Act of 1791 changes the relation which, at common law, exists between the mortgagor and mortgagee, yet that, by reason of the proviso in the second Section, it has no application where “ the mortgagor is out of possession and, in that contingency, the common law relation prevails.

The construction which our Courts have given to this proviso does change the position of the mortgagor and mortgagee, as to the legal estate, where the former is out of possession.

Where, by reason of the mortgagor being “out of possession,” the legal estate is vested in the mortgagee, he can occupy no other or higher position than the mortgagee at common law. All the rights and equities which attach to the one the other is entitled to, and no more; unless some covenant in the instrument restrains him until condition broken, he may enforce his legal rights by a possessory action, or claim the reception of the rents and profits. When, however, he comes into a Court 'of Equity, for a foreclosure, he does not proceed under his legal title for a recovery of the land, but to enforce the security for his debt; and the relief which he thus seeks he can obtain only by an order for the sale of the property, that the equity of redemption may be barred, and all the rights which attach to both the parties will vest in the purchaser under such sale. “In such a Court the equity of redemption is considered to be the real and beneficial estate, tantamount to the fee at law.”— 4 Kent, 159. And it is this that equity acts upon in a bill for foreclosure.

In what character does this plaintiff come into Court, except as mortgagee, asking that Beard, and the other defendants claiming through him, may be barred of all equity of redemption by a sale, and tliat the proceeds shall be applied to the debt, as a security for which the mortgage was taken and held ?

The third ground charges error in the Court below, in holding that, under the testimony, Richardson had paid Beard all the purchase money for the land he conveyed to him; and, especially, because it appears that one of the notes transferred to him by Beard was guaranteed by Richardson.

This circumstance, if the debt for the land was paid, (and the Chancellor so held,) can in no way revive the liability of Richardson for the consideration given for it. There is no obligation resting on him, under his contract, for the purchase — lie has fully satisfied it. His guarantee of Abney’s note is an independent undertaking; it did not enter into the original elements of the purchase; it was not one of the modes of payment promised. His debt for the land has been met; and, if the plaintiff, Williams, supposes he has the right to follow the note, so guaranteed, in the hands of-Beard, and compel its appropriation to his debt, he must pursue his remedy, as he may be advised, under some other form. He makes no such claim under his bill.

The question of payment of valuable consideration, without notice, on a review of the' testimony by the Chancellor, has been resolved against the plaintiff.

We have lately had occasion to review the course of the Courts of the last resort in this State in regard to the effect of the judgment of a Chancellor on mere questions of fact; and, following the rule which we find by the eases generally applied, we require the party seeking the reversal of the conviction to which he has thereon arrived, to show that the overbearing weight of the testimony leads to a conclusion different from that which, on consideration of it, he has adopted.

A full and close examination of the facts submitted in this cause has not impressed us with the presence of such preponderating proof, on the other side, as would justify us in interfering with the judgment of the Chancellor in this regard.

The plaintiff surely can complain of nothing but his own laches. For near seven years he neglected to record his mortgage, and this notwithstanding he was well informed as to the various sales made by his grantee — one on the very day, and the principal one 'within two months of the execution of his own deed. He had knowledge of the possession by the various purchasers from Beard, of the im-' provements they were making on the premises, and the moneys arising from the re-sales were paid to him on the bond he held on the contract with Beard. Is it straining conjecture too far to say that, with all this information, he felt safe in his debt, trusting rather to the solvency of the sureties than to his mortgage ? The general change in the condition of the people of the State, to which, probably, the sureties to the bond have not been exempt, has prompted him, too late, to place his mortgage in a position which might have made it available, if earlier sought. The consequences of his own default must not be allowed to fall on the heads of innocent purchasers.

We also concur with the Chancellor in the view which he takes as to the parcels of the mortgaged premises conveyed by Beard to Patrick Heffernan, and sold to John A. Powers, in his lifetime.

The decree is affirmed, and the motion dismissed.

Willard, A. J., concurred.