Case ID: va_34/html/0578-01.html
Source: Caselaw Access Project
Author: {"author": "CARR, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Naylor v. Throckmorton & Others.
    January, 1836,
    Richmond.
    (Absent Tucker, P.)
    Mortgages — Several Executed Same Day — Priority— Statute. — Three several mortgages of the same subject, to secure several debts due to the several mortgages, are executed on the same day, one after the other, In quick succession; they are all proved and delivered to the clerk to be recorded, also on the same day, but in the same order in which they were executed; there being no design, and no express agreement, either that any one of the mortgagees should have priority over the others, or that they should all stand on equal footing: Held, upon the construction of the statute, 1 Rev. Code, ch. 99, § 12, that the mortgagee whose mortgage was first executed is entitled to priority of satisfaction over the other mortgagees.
    Machir being justly indebted to Inskeep 3200 dollars, and to Pierce 650 dollars, and Throckmorton being the attorney of the creditors for the collection of the debts; and Machir being also indebted to Ren-nick’s executor 814 dollars, and to Welton’s administrator 2255 dollars, and Naylor being the attorney of these creditors for the collection of these debts; Inskeep and Pierce with Throckmorton their attorney, and Rennick’s executor and Naylor his attorney, also acting as attorney for Wel-ton’s administrator, met together at Machir’s house, on the same day, in consequence of a proposition of Machir, made to each and all of them, to secure the payment of the debts to the several creditors, at a distant day and all the same day, by mortgaging real estate for the purpose. Whereupon three deeds of trust were prepared; by one of which Machir conveyed a parcel of land in Hampshire to Throckmorton '-and James Gamble, trustees, for the security of the two debts due to Inskeep and Pierce; by another, he conveyed the same land to Naylor, trustee, for the security of the debt due to Rennick’s ^executor; and by the third, he conveyed the same land to Naylor and Gamble, trustees, for the security of the debt due to Welton’s administrator. These three deeds having all been prepared, were executed by Machir and the other parties respectively, in quick succession, on the same day; but the deed of trust to Throckmorton and Gamble for the security of the debts due to Inskeep and Pierce, was the first executed; that to Nay-lor for the security of the debt to Rennick’s executor, was the next, and that to Nay-lor and Gamble for the security of the debt to Welton’s administrator, was the last executed. Rennick’s executor and Naylor were subscribing witnesses to the execution of the deed to Throckmorton and Gamble for the benefit of Inskeep and Pierce; Throckmorton and Pierce were witnesses to the deed to Naylor for the benefit of Rennick’s executor; and Throckmorton, Pierce and Rennick’s executor were witnesses to the deed to Naylor and Gamble for the benefit of Welton’s administrator. The three deeds, having thus been executed at the same place, on the same day, and as nearly as possible at the same instant of time, yet in the order above mentioned, were carried forthwith to the office of the clerk of the county court, proved by the subscribing witnesses, and delivered to the clerk to be recorded, likewise as nearly as possible at the same time; but of the three deeds, that to Throckmorton and Gamble for the benefit of Inskeep and Pierce was the first that was so proved and delivered to the clerk to be recorded ; and the other deeds also were proved and delivered to the clerk to be recorded, in the order in which they had been executed.
    Machir, the debtor, intended to give ample security for all the debts; and it was the opinion of all the creditors present, and of Throckmorton and Naylor, their attorneys, at the time of the execution of the deeds, that the land thereby mortgaged, was an ample security for all the debts due to the several creditors. But before *the time came for selling the trust subject to raise the fund for the debts, the land had fallen in value, owing to a general depreciation of landed property in the neighbourhood; and it was apprehended, that the proceeds of the sale of the land under the deeds of trust, would not suffice for the payment of all the debts thereby charged upon it.
    This apprehension gave rise to the present suit; which was a bill exhibited in the superiour court of chancery of Winchester, by Naylor, the trustee in the two last mentioned deeds, against Throckmorton and Gamble, the trustees, and the creditors interested, in the deed first executed, and first proved and delivered to the clerk to be recorded, — for the purpose of settling the rights of the several parties under the three several deeds. Naylor insisted, that, under the circumstances attending the transaction, all the creditors claiming under the three deeds, were to be placed on an equal footing, so that, in case the fund should prove insufficient to pay all the debts, it should be divided among the several creditors ratably in proportion to their respective claims. The defendants, creditors claiming under the deed first executed &c. insisted, that they were entitled to priority over the creditors claiming under the other two deeds. And the question was, whether these defendants were entitled to such priority? which depended on the construction, effect, and application to the case, of the provision in the statute of conveyances, 1 Rev. Code, ch. 99, § 12, p. 364. 
    
    
      *By the pleadings and proofs in the cause, the facts above stated were clearly established. But there was no proof on the one hand, and no circumstance from which it could be inferred, that Machir intended to give any preference to any of the creditors over the others, or that any of the creditors stipulated for such a preference, or that it was designed, by the order in which the deeds were executed, to give, or to obtain, such preference. On the other hand, in the opinion of the chancellor and of this court, there was no proof of any express agreement or distinct understanding among the parties, that the creditors secured by the three deeds, should all stand on equal ground, and, in case of deficiency in the fund, be entitled to satisfaction pro rata; though Naylor and his counsel insisted, that this was fairly inferrible from the circumstances of the transaction.
    In the progress of the cause in the court of chancery, the trust subject was sold under order of the court. And the proceeds of sale proving unequal to the payment of all the debts, the chancellor, declaring that the creditors claiming under the deeds, were entitled to priority of satisfaction according to the order of time in which the deeds were executed, — decreed, that the fund should be applied, to the payment, first, of the entire debts and interest due to Inskeep and Pierce, and then the entire debt and interest due to Rennick’s executor, and that the balance, which was only 59 dollars, should be applied towards the payment of the debt due to Welton’s administrator. Prom which decree, Naylor appealed to this court.
    *Robinson, for the appellant,
    contended, that the provision of the statute did not, in its terms, apply to the present case: that the statute settled the priority among mortgagees claiming under several mortgages of the same subject, only where each mortgagee had no notice of the •other mortgagees, and among such mortgagees without notice, it gave the priority to him whose deed should be delivered to the clerk for registry on the earliest day, and in case the several deeds were delivered for registry on the same day, it gave the priority to the mortgagee whose deed was first executed. But here, each and every mortgagee had full notice of each and every deed. Much more was the provision inapplicable to this case, in its policy and spirit. The policy was to make the priority of right depend, in general, on priority of registry; but in respect to priority o± registry, it made no account of fractions of a day; so that if one deed should be delivered for registry in the morning, and another in the evening, such priority of registry should not give priority of right, and in such case the priority of right should depend on the dates of the execution of the deeds. Now, seeing that the statute in regard to priority of right derived from priority of registry, which was the main point of its policy, had no respect to fractions of a day, he argued, that it would be an unreasonable construction to hold that it had respect to fractions of a day, in regard to priority of right derived from priority in the execution of the deeds; especially, as the law, in general, never took account of fractions of a day, and the exceptions to the rule were always made by express and distinct provision. Here, there was no such express distinct exception to the general rule. In truth, as the statute, when it spoke of priority of registry, was without question providing for cases of registry of different deeds on different days, so when it spoke of priority of execution of deeds, it was providing for cases of different deeds executed on different days. *But, even supposing that the statute was applicable, in general, to different mortgages of the same subject executed on the same day, and in settling the priority between such mortgages when offered for registry on the same day, had respect to the fraction of a day ; yet the provision could not justly be applied to the present case. When it gave priority to the deed first executed, it could only have intended to give priority to the first contract in point of time. As where there are several creditors, each acting independently of the other, each seeking security for his claims, each intending to get priority over all other creditors, and each obtaining a several mortgage of the same subject on the same day; in such case, the mortgage first executed would be, really and substantially, the first contract in point of time; so intended to be by the mortgagor; so intended too, by the mortgagee. But here, no priority of contract was intended by the mortgagor or by the mortgagees, or any of them. The debtor proposed to give all the creditors security for the payment of their debts, at a distant day, and all at the same day, by mortgaging the same subject: the creditors, each and all, agreed to give the proposed indulgence, and to take the security: the agreement of each and all was exactly coeval in point of time: the three mortgages for the security of each were prepared in pursuance of that agreement. It was impossible, that all the mortgages should be executed at one and the same instant of time; and it was not the result of contract or of design, but of accident, that the deed for the security of Inskeep' and Pierce was executed first. Their claim to priority, then, "rested upon this mere accident: they could not pretend a priority of contract, which they did not stipulate or intend to secure to themselves, which the other mortgagees certainly did not intend they should have, and which, as certainly, the mortgagor did not intend to give them. Independently of the inference which the *main circumstances of the transaction afforded, the single fact, that the mortgagees secured by each of the deeds, attested the other deeds as subscribing witnesses, was enough to shew, that there was no rivalry among them, and no contest for preference; no preference given, sought or intended, by the order in which the deeds were executed. To a prior execution of a deed under such circumstances, it seemed impossible that the statute. should have intended to give any preference. The statute gave no rule for settling the priorities. Equity, therefore, should execute the real purpose of the parties, deny preference to either, and place all the mortgagees claiming under the three deeds, on an equal footing.
    Johnson, for the appellees,
    said, that the policy of the statute was to provide a plain rule for ascertaining the priority among mortgagees of the same subject; an arbitrary rule, if you please, or inequitable in its application to particular cases, but still a fixed and certain rule; the legislature wisely considering, that sued an enactment, to which parties might conform in their transactions, and which might furnish them a plain guide in ascertaining their rights, would make them diligent and careful in their contracts, and prevent litigation. And he maintained, that the present case was within the letter and plain policy of the statute. The case was provided for by it, unless it can be supposed, that the legislature designedly left the question of priority doubtful and undetermined, in all cases of several mortgages executed on the same day, and recorded also on the same day. If the legislature had no respect to fractions of days in such cases, it wilfully left its work incomplete. Among mortgages recorded on the same day, it gave priority to that which was first executed, in unqualified terms; and- it gave this priority to the deed first executed, over the deed latest in its execution, even where the last mortgagee, having his deed first ^registered, should have no notice of the prior mortgage; much more, if he should have notice of it. Then as to the particular case, he said, that if there had been any agreement, expressed or fairly to be implied, that though the security should be given to each creditor by several deeds of mortgage, they should all stand on an equal footing, he would not deny, that equity might enforce that agreement. But here, there was no agreement between the mortgagor on the one part, and the several mortgagees contracting jointly on the other part: there was no agreement at all of the mortgagees, each with the others: there were three several agreements of the mortgagor with each of the three mortgagees, acting independently of the others for his own several interest and security, that the mortgagor should give each severally a security for the debt due him. If the parties had designed, that all the mortgagees should stand on the same footing, and none have priority over the others, why was not one deed of trust executed to one and the same set of trustees, for the benefit of all the mortgagees? That would have been the obvious method of effecting such a purpose. Or, if separate deeds were preferred, and yet the intent was that all should be placed on an' equal footing, why was not reference made in each deed to the others, and that intent indicated? Some express agreement or distinct understanding must be shew to warrant the court of equity to take away the legal advantage which the appellees obtained, in having their deed first executed. The carelessness of the other mortgagees* could not be a ground for equitable relief. Neither was the absence of positive intention or agreement one way or the other, any ground of equity; for that was precisely the case in which the statute gave priority to the deed first executed. In truth, he said, it was quite certain, that there was no positive agreement, understanding or intention on the subject, and no necessity for any, since, in the opinion of all parties, *the trust subject was an ample security for all the creditors.
    
      
      He decided ttie cause in the court of chancery.
    
    
      
       See monographic note on "Mortgages” appended to Forkner v. Stuart, 6 Gratt. 197.
    
    
      
      There were other points presented by the pleadings, and discussed at the bar; but of these the court took no notice in its decision, and therefore, they are purposely omitted in the report. — Note in Original Edition.
    
    
      
      The words of the statute are, that “ all deeds of trust and mortgages, whensoever they shall be delivered to the clerk to be recorded “ shall take effect and he valid as to all subsequent purchasers for' valuable consideration, without notice, and as to all creditors, from the time when such deed of trust or mortgage ’’ — ‘‘shall have been so acknowledged, proved or certified, and delivered to the clerk of the proper court to be recorded, and from that time only: Provided, however. That, if two or more deeds embracing the same property, after having been so acknowledged, proved or certified, be delivered to the clerk to be recorded on the same day, that which was first sealed and delivered, shall have preference in law.” — Note in Original Edition.
    
   CARR, J.

(after stating the circumstances of the case, and quoting the words of the statute), said — The case seems to me to lie in very narrow compass. There is no doubt in point of fact, that the deed for the benefit of Inskeep and Pierce was first executed. But it is contended that the transaction being one, all the deeds executed, one after another, as nearly as possible at the same time, the parties present, and witnessing each other’s deeds; we must conclude, that the understanding was that the money arising from the land, should be shared equally among them, in proportion to their debts. It is certain, there was no such agreement made, -nor any such understanding expressed by any of the parties ; nor was there any concealment or shadow of fraud; all was done openly. It is certain too, that it was the opinion of all parties, that the land would sell for more than would pay all the debts; and hence it would be deemed of little moment who was first paid, and. probably none of them thought about it. It is clear to me, that the deed to Inskeep and Pierce has the legal preference; and I cannot perceive any ground, on which equity can take this legal advantage from them. I think the decree must be affirmed.

The other judges concurred. Decree affirmed.