Case ID: sc-eq_10/html/0232-01.html
Source: Caselaw Access Project
Author: {"author": "Johnson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Smith and Cuttino, Administrators, vs. Sarah Osborne, and others.
    Where a mortgage of land having been recorded, the land was sold by the mortgagor and the purchaser took possession, Held, that the recording was notice to the purchaser, and the statute of limitations will not bar the mortgage lien. The decision in Thayer v. Cramer, 1 M’C. Ch. 395, considered and adhered to. [*342]
    Heard before Chancellor Johnston, at Sumter, February Term, 1833.
    This bill was filed to foreclose a mortgage of a tract of land, executed 23d Nov. 1816, by Wm. R. Theus to George and Savage Smith, the plaintiffs’ intestates, to secure the payment of a bond of the same date, the last instalment of which became due 1st January, 1821. The mortgage was recorded in the Register’s Office, February 10th, 1811. On the 1st May, 1818, Theus sold and conveyed the mortgaged premises to Robert F. Wethers, who on the 28th of the same month sold *and conveyed to Charles L. Osborne. Osborne then went into possession and retained it until his death in 1826, since which the defendants, his distributees, have continued in possession. The bill was filed in August, 1830.
    The defendants in their answer set up the purchase from Wethers, which they allege was bona fide and without notice of the mortgage, and rely on the statute of limitations. The main question for the consideration of the Court was whether the recording of the mortgage was such notice as to prevent the operation of the statute ; in relation to which the Chancellor in his decree says :
    “ With respect to the act of limitations, I am not at liberty to depart from the decisions of the Court of Appeals.
    “Purchasers must be held to reasonable vigilance. When Osborne purchased from Wethers, he was bound to look into his title. If he had looked into it, he would have discovered that it came from Theus ; and then the recording of the mortgage would have been notice to him.
    “ The time must come when the case of Thayer and Cramer, 1 M’C. Ch. 395, and the case of Bynum and Nixon, will be held to lay down propositions entirely too broad and unqualified. They cannot be reconciled with the case of M’Rae and Smith, 2 Bay, 339.
    “ It will not do, in principle, to except out of the general rule, that trustees by implication may rely on the statute — purchasers from mortgagors, which purchasers are in no respect trustees, except as held so by the Court on account of their fraud in purchasing the entire interest knowing that it is burdened with a lien. If they purchase without notice, they stand on the ground of innocent purchasers, and besides are entitled, from their adverse holding, to the benefit of their possession from the time they take it. If they purchase with notice, they are entitled to the benefit of their possession from the time they give notice of its adverse character to the incumbrancer.
    “But I am bound by the decisions which make' no such distinctions.”
    His Honor therefore decreed foreclosure, and ordered a sale of the premises to satisfy the balance reported by the Commissioner to be due on the bond.
    *From this decree the defendants appealed, on the ground that the plea of the statute of limitations should have been sustained,
    
      Haynesworth and Blanding, for the appellants.
    
      C. and W. Mayrant, for the appellees.
   Johnson, J.

Both the grounds of this motion resolve themselves into the question whether the complainant is bound by the statute of limitations, and but for the doubts thrown out by the Chancellor, and the very learned argument of my brother HakpeR, in the judgment delivered by him in Thayer v. Davison, when presiding in the Court of Chancery in Charleston, I should have regarded the cases of Thayer and Cramer, and Bynum and Nixon, referred to by the Chancellor, as decisive of it. I have been induced by these considerations to look again into the subject, and the result of further examination is, that it is not a case for the technical application of the statute. The statute does not operate to invest the party in possession and claiming- under it with any right or title, but only as a bar to the plaintiff’s right to recover. The words are that “if any person or persons to whom any right or title to lands, tenements or hereditaments in this province, shall descend or come, do not prosecute the same within five (not ten) years after such right or title accrued, that he and they, and all persons claiming under him and them, shall be for ever barred to recover the same,” &c.; and the same statute points out an action at law as the only effectual mode of making or prosecuting the claim, so as to prevent the bar of the statute.

As mortgagees, the legal estate in the lands never has been, and is not now, in the complainants or their intestates — the Act of 1791, 1 Faust, 65, expressly declares “that no mortgagee shall be entitled to maintain any possessory action for the real estate mortgaged, even after the time for the payment of the money secured by the mortgage is elapsed ; but the mortgagor shall be deemed owner of the lands, and the mortgagee as owner of the money lent or due, and shall be entitled to recover satisfaction for the same, out of the lands, in the manner above set forth.” Neither the plaintiffs nor their intestates could *at any time heretofore have made claim to those lands by an action at law, nor is that the object of these proceedings — they are only intended to charge them with the payment of a debt due by the mortgagor. How then can it be said, that the statute of limitations operates as a bar? No one can maintain an action for the land, until it shall have been regularly sold, and the equity of redemption foreclosed; and if, notwithstanding, the statute of limitations shall begin to operate, either from the date of the mortgage or from the time of the condition broken, it might well happen that the mortgagee would be barred, notwithstanding the facilities which the Courts afford, and all the diligence which he might use : for we know that suits in law and equity are sometimes protracted even longer than necessary to complete the bar of the statute.

I know that the rule of the statute is frequently adopted in Chancery, when it does not operate as a technical bar ; and here I think the question, whether recording shall be considered as notice or not, becomes important. The Act requiring mortgages to be recorded, seems to have been intended principally to settle the priority between them — but the motive for recording them is so great, that few would neglect it, who thought it a necessary security, and few men who feel the stimulus which interest usually imparts, would neglect to profit by the information which the Register’s office would impart when they were about to purchase a tract of land, unless they had implicit confidence,in the representations of the seller; and if they suffered themselves to be deceived, they ought to take the consequences. Through this mean, a purchaser has it in his power to inform himself, and if he neglects to do so he has no claim on a Court of Equity, for the application of the rule of the statute. On the other hand, if the mortgagee neglect to record his mortgage, and by this means puts it out of the power of the purchaser to inform himself, he is protected as a purchaser without notice. In this view, therefore, recording the mortgage is notice to the subsequent purchaser.

*The case of M’Ray v. Smith, 2 Bay, 339, noticed by the Chan-ceilor, is, I think, reconcilable to this view of the subject. That was an action to try titles to land. The plaintiff claimed under a sheriff’s sale on fi. fa., against one Woodroof, and the defendant under a purchase from him. The judgment had been obtained against Woodroof before he sold to the defendant, and bound the land ; but the defendant had had possession under his purchase more than five years before the sale by the sheriff, and it was held that he was protected by the statute. Having the judgment, the creditor might, at any moment, and in defiance of Wo.odroof, have sold the land, if he intended to resort to it for the satisfaction of his debt — and his neglecting to do so, furnished a reasonable ground for the application of the rule of the statute.

It is therefore ordered and decreed, that this motion be dismissed; and that the decree of the Circuit Court be and the same is hereby affirmed.

O’Neall, J., concurred.

Harper, J., dissented.