Case ID: wis_20/html/0107-01.html
Source: Caselaw Access Project
Author: {"author": "Dixon, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Wynn vs. Carter and others.
    
      Jfiguity — Protection of prior purchaser with unrecorded deed — Bights of subseguen purchase!' under recorded deed.
    
    1* Courts of equity, notwithstanding the recording act,will control and dispose of so much of the purchase money of land as remains unpaid, so as to protect a previous bona, fide purchaser by an unrecorded conveyance, so far as this can be done without infringing upon the equitable rights of the subsequent purchaser, or of third persons.
    
      2. But where the purchaser is bound for portions of the purchase money to third parties, so that the court cannot equitably relieve him from such obligations, it will not compel him to pay twice, in order to protect the interest of the party holding the earlier unrecorded deed or mortgage. So held, in a case where the purchaser had assumed the payment of a mortgage which was a lien upon the premises at the time of his purchase.
    APPEAL from the Circuit Court for Poch County.
    On tibe 25tb of November, 1854, one Newell sold and conveyed certain lands in Eock county to the plaintiff, Wynn, and the defendant Lawsha, who mortgaged back the premises to Newell, for $7,991.50, being a part of the purchase money. The deed and the mortgage were both recorded in December, 1854. In 1856, Wynn and wife conveyed their interest in the premises to Lawsha, and the deed was recorded August 27th of that year; and Lawsha and wife, about the same time, executed a mortgage of the premises to Wynn, which, however, was not recorded until March 1st, 1859. On the 12th of March, 1857, the defendant Garter purchased the premises of Lawsha, and took a deed of the same, which was recorded the same day. The consideration stated in this deed is $8000, and it contained covenants of seizin and general warranty, and against all incumbrances except the mortgage to Newell, which Carter covenanted to pay.
    This action was brought to foreclose the mortgage of Lawsha and wife to Wynn, the amount due thereon being $1,620.23. Garter defended, claiming the premises free from the lien of said mortgage. It appears from the evidence that at the time the Wynn mortgage was put on record, Garter had paid about $6000 principal and interest on the Newell mortgage, and there was still due on it over $3000; that after the Wynn mortgage was recorded, and while said amount remained due on the New-ell mortgage, Carter sold the greater part of the premises to the defendant Perriber, executing to him a warranty deed; and that shortly after said Wynn mortgage was recorded, Garter had actual notice of its existence. As to the question whether Carter had such notice before his purchase, it is not deemed important to set out tbe evidence bere. Tbe circuit court found tbat be bad not sucb notice at tbe time of bis said purchase; and held tbat be was not liable to tbe plaintiff for tbe amount remaining unpaid on tbe Newell mortgage at tbe time when be subsequently received sucb notice. Judgment for tbe defendant Garter ; from wliicb tbe plaintiff appealed.
    
      Knowlton & Jackson, for tbe appellant,
    contended, upon tbe evidence, tbat Garter bad notice of tbe mortgage in suit before bis purchase. 2. Tbat if this was not so, yet it was certain tbat be bad sucb notice before foil payment of tbe purchase money; and tbat a court of equity would protect him only to tbe extent of tbe purchase money actually paid before notice. To this point they cited Warner v. Whittaker, 6 Mich., 185 ; Thomas v. Graham, Walker’s Cb., 117; Boone v. Ohiles, 10 Peters, 210, and cases there cited.
    
      J. B. Cassoclay, for respondent,
    cited sec. 25, cb. 86, E. S.; Trotter v. Hughes, 2 Kern., 74, and cases there cited; Judson v. Gray, 17 How. Pr. E., 295; Bel & Hud. Canal Go. v. West-chester Go. Bank, 4 Denio, 97; 5 Wend., 235; 1 Parsons on Con., 389 ; Wood v. Ghapin, 13 N. Y., 509.
   Dixon, C. J.

This case presents an important question of fact, and tbe evidence should have been printed. It is not. Tbe appeal should for this reason, in strictness, be dismissed. But we have read tbe evidence in manuscript, and think it folly sustains tbe finding of tbe court below. It leaves no doubt upon our minds tbat Garter purchased in good faith and'for a valuable consideration.

This fact being found in Carter’s favor, tbe case seems very clear, under tbe recording act. Tbe plaintiff’s counsel argue as if it were a mere claim to equitable relief according to tbe rules of tbe court of chancery. But in this we think they are mistaken. Garter’s deed was recorded before tbe plaintiff’s mortgage, and bis claim comes strictly within tbe 25th section of tbe recording act. R. S., ch. 86. Tbat section reads as follows: Every conveyance of real estate within tbis state hereafter made, which shall not be recorded as required by law, shall be void as against any subsequent purchaser, in good faith and for a valuable consideration, of the same real estate, or any portion thereof, whose conveyance shall be first duly recorded.” Carter's right depends, then, not upon the protection afforded by courts of equity, independently of the statute, to subsequent purchasers for a valuable consideration without notice, but upon the protection given by the statute itself, which is in some respects materially different. The doctrine of equitable protection is surrounded by restrictions, some of which are inapplicable under the statute. One point of difference, in particular, is that which arises from the nature of the estate purchased. In equity, the purchaser must have acquired an absolute legal estate, or believed that he was doing so. He must aver and prove that his vendor was seized in fee, or pretended to be seized; and if he purchases an equitable title, he takes it subject to all existing equities, whether notified of them or not. But under the statute this is not so. With certain exceptions, the statute protects every estate or interest in lands, as well equitable as legal. By secs. 34 and 35 of the act, the term “ purchaser ” is declared to embrace every person to whom any estate or interest in real estate shall be conveyed for a valuable consideration, and the term “conveyance,” every instrument in writing by which any estate or interest in real estate is created, aliened, mortgaged or assigned, or by which the title to any real estate may be affected in law or equity, except wills, leases for a term not exceeding three years, and ex-ecutory contracts for the sale or purchase of lands. See also The State of Wisconsin v. Titus, 17 Wis., 244, 245.

As to the facts necessary to constitute a tona fide purchase, the statute, under the construction which it has received, has made no material change. The language is, that the previous unrecorded conveyance shall be void as against the subsequent purchaser whose conveyance shall be first duly recorded; but courts of equity, looking at tbe intention rather than tbe words of tbe act, bold tbe purchaser to be bound by tbe previous conveyance, wherever be would, under tbe same circumstances, have been bound in equity before tbe passage of tbe act. They will not permit him to use what tbe law has placed in bis bands as a shield, for a purpose not necessary to bis protection, and to tbe injury of a prior bona fide purchaser. They may not, perhaps, deprive tbe subsequent purchaser in good faith of bis title, but they will, in all cases, control and dispose of tbe purchase money, or so much of it as may remain unpaid, so as to protect a previous bona fide purchaser by an unrecorded conveyance, so far as this can be done without infringing upon the equal lights or equities of tbe subsequent purchaser or third persons. Eegarcling tbe case, then, in this respect, as depending upon tbe strict equity doctrine, what are tbe rights of tbe plaintiff? His counsel insist that as Carter bad notice of tbe plaintiff’s mortgage before tbe purchase money was fully paid, and whilst enough remained unpaid to discharge tbe mortgage, tbe plaintiff is entitled to a lien and judgment for tbe full amount. It is in general true that tbe purchase money must all have been paid before notice, and that it is not enough that it is merely secured to be paid. But this rule is not without its exceptions. Tbe giving of negotiable promissory notes for tbe price, which have been negotiated and ¡massed into tbe bands of innocent holders for value, will constitute one a bona fide purchaser in equity. Tbe subsequent purchaser, in such case, having become bound, in a way that tbe court cannot relieve him, for tbe payment, it can grant no relief to tbe previous purchaser. Tbe equity of tbe latter by reason of Ms prior conveyance, is met and overcome by that of tbe former, who otherwise would be obliged to pay twice. Thomas v. Graham, Walker’s Ch. R., 119; Freeman v. Doming, 8 Sandf. Ch., 827. And it seems to us that Carter's equity in this case is tbe very same as if be bad given bis own negotiable notes to Lawsba, secured by a mortgage upon tbe premises, and they bad been transferred before maturity, for value, to Newell. He assumed tbe payment of tbe mortgage to Newell, wbicb was an existing lien upon tbe premises. That mortgage be must pay at all events, or lose tbe property; and if, in addition, be is also required to pay tbe mortgage to tbe plaintiff, tbe consequence is tbe same as in tbe other case — be must pay twice. In either case we are of opinion that be is entitled to tbe same relief, and that tbe plaintiff cannot be rewarded for bis own negligence in not recording bis mortgage, at tbe expense of one wbo has been guilty of no neglect, and wbo entered into tbe transaction in tbe most perfect good faith. In Jackson v. Winslow, 9 Cowen, 12, a similar question was presented, and it was decided that a grantee’s assuming tbe payment of a debt due from bis grantor, is a sufficient consideration to mate a purchase or mortgage of land valid within tbe registry acts, as against an unrecorded deed.

These observations, we believe, dispose of tbe principal objections urged against tbe judgment, and show that it must be affirmed.

By the Court. — Judgment affirmed.