Case ID: tenn_13/html/0205-01.html
Source: Caselaw Access Project
Author: {"author": "CatRon, Ch. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Gann vs. Chester and Blair.
    When the vendor assigns the notes given for the purchase of land, creditors who obtain a mortgage upon the land in the meantime, will be preferred, although the vendor may be compelled to pay the notes upon his endorsement.
    When the vendor of land assigns the notes given for the purchase money to another, the lien for purchase money is destroyed as to creditors, and a recovery of the amount of the notes upon his endorsement will not revive it.
    When a vendor conveys land, he can set up no lien, nor have any priority of satisfaction for the unpaid purchase money, over other creditors of the vendee.
    In February, 1820, Gann sold to Chester a plantation of three hundred and fifty acres, a grist and saw mill, situate in Washington county, for eight thousand dollars. On the 25th December, 1820, the parties settled; four thousand and more dollars had been paid of the purchase money at that time, leaving three thousand nine hundred and eighty nine dollars due; to secure the payment of which, Chester gave Gann his six several notes due annually, the first five for seven hundred dollars each, and the sixth for three hundred and eighty nine dollars. At the same time Gann gave Chester his deed in fee for the premises, which was duly registered. Afterwards, and before 1823, some other payments were made on the notes.
    Shortly after the notes were executed, being bills single under seal, payable in current bank notes of Tennessee, Gann sold and assigned them to others. Not being enabled to collect them from Chester, the assignees compelled Gann to take them up.
    Between 1820 and 1823, John Blair, the defendant, and Samuel G. Chester, became the security of William P. Chester to the banks for two thousand one hundred and twenty dollars. Peter Parsons and John Blair had become the securities of Chester in four cases of appeal from the county to the circuit court of Washington, for a considerable amount, for which they were bound to M’-Alister. Blair had also become bound to Hattenburger and to Broyles for nineteen hundred dollars, and William P. Chester owed John Chester fifteen hundred and eighty four dollars.
    To indemnify the foregoing securities, and to secure John Chester, William P. Chester, on the 15th July, 1823, mortgaged the land purchased of Gann, two houses and lots in Jonesboro’, and a tract of land in Bum-pass’ Cove. The houses were shortly after burned, leaving not enough to cover the debts. The mortgage was duly registered. A bill was filed to foreclose the mortgage, and in .1827, the chancery court at Greenville directed the premises tobe sold. And on the 19th February, 1828, the land was sold by the clerk and master, at public sale, at which John Blair, the defendant, became the purchaser at fifteen hundred dollars; agreeing at the same- time to take the property mortgaged and relieve the other securities, provided John Chester would abandon his claim. This was done. The debts assumed by Blair were equal to the value of the property and more. On the 2d September, 1831, Gann filed his bill, setting up his lien for the unpaid purchase money. The chancellor dismissed the bill, from which decision the complainant appealed to this court.
    
      Kennedy and John Williams, for plaintiff in error.
    
      J. A. M' Kinney, for defendant in error.
   CatRon, Ch. J.,

delivered the opinion of the court.

The relief sought by the bill is resisted on different grounds. First. Because Gann assigned away the notes, and which stood so assigned, and the property of others, at the time the mortgage was made and registered.

It is contended, there could be no lien resting in Gann, he having parted with the securities, and all right of action thereon. That in this situation the creditors of William P. Chester took their mortgage, and no subsequent act of Gann’s could overreach and give his once existing lien apriority.

That assignees had no lien, this court decided at Nashville, 1832. That Gann’s lien continued to exist after he had parted with his right of action, we imagine it would be impossible to maintain. Yet this is a first impression, without the authorities being at hand to aid our enquiries, and therefore we will not conclusively adjudge the point.

2. On the second ground of defence, we are informed the Chancellor dismissed the bill, to wit, that where the vendor conveys the land, he can set up no lien, or any priority of satisfaction, over other creditors of the vendee, for unpaid purchase money.

In Tennessee, our uniform policy has been to permit the most unrestrained alienation of lands, and to hold them liable for the payment of debts, the same as personal property. Such was the provision of the statute of 5 Geo. II, applicable to all the American colonies belonging to Great Britain, and which has been in force for a century. No lien exists on the slave or other personal property, for unpaid purchase money: and the rule that the vendor of land has such lien, was adopted from the British courts, grounded on a policy in reference to the liability of real estate, essentially dissimilar to ours.

By our statutes, where a regular mortgage is taken, and the lien created in the most formal manner, if it be not registered in the time prescribed, it does not affect the creditors of the mortgagor. They may seize and sell the estate. Washington's lessee vs. Trousdale, Mar. and Yer. R. 385. In the case referred to, this court, on different arguments and much consideration, gave such construction to the registry act of 1819, on the principle that the doctrine of notice had no application to creditors, that in all our acts for the registering of titles, a purchaser for valuable consideration without notice, and a creditor, were placed on the same foot, and that their equity was equal to that of the mortgagee.

If in that case a creditor was preferred against a mortgagee, but who had let the time to register slip, it would be most inconsistent to say, that a secret lien for unpaid purchase money, could be set up, ten years after the ven-dee had been in the visible occupancy and ownership. Had Gann taken from Chester a.mortgage deed on the land, and failed to have it registered until he filed this bill, and there can be no doubt, as against Blair and others, the younger mortgagees, he would have had no remedy. The positive legislation of the country cut it off. How then can the courts of chancery create and enforce a mortgage for unpaid purchase money, without the most manifest violation of the standing policy of the legislature?

It must be borne in mind, the attempt to enforce the lien against the creditor’s legal title, is now made for the first time in this State. That the like has been done in any American court, we are not informed.

The Supreme Court of the United States, in Bayley vs. Greenleaf, (7 Wheaton,) refused to enforce such lien as against the creditor, merely on the ground that it was the policy of the American States generally, enforced by statutes, to declare all conveyances not recorded, and all secret trusts, void as to creditors, as well as subsequent purchasers without notice. “And that, to support the secret lien of the vendor against a creditor who is a mortgagee, would be to counteract the spirit of these laws.” This decision meets the most decided and unanimous approbation of this court. No State in the Union has more steadily adopted the policy referred to by the Supreme Court of the United States, or has more reasons for being satisfied with it. The decree below will be affirmed.

Decree affirmed. 
      
       Crockett vs. Claiborne, 3 Yerger’s Reports, 27.