Case Name: McDONALD et al. v. DABNEY; et vice versa
Court: Supreme Court of Georgia
Jurisdiction: Georgia
Decision Date: 1926-02-10
Citations: 161 Ga. 711
Docket Number: Nos. 4948, 5000
Parties: McDONALD et al. v. DABNEY; et vice versa.
Judges: All the Justices concur, except Bussell, G. J., dissenting.
Reporter: Georgia Reports
Volume: 161
Pages: 711–732

Head Matter:
McDONALD et al. v. DABNEY; et vice versa.
Nos. 4948, 5000.
February 10, 1926.
Rehearing denied February 24, 1926.
Jones, Evins, Moore & Powers and W. A. Sutherland, for plaintiffs in error in main bill of exceptions.
Lowndes Calhoun, contra.

Opinion:
Hines, J.
(After stating the foregoing facts.)
We shall not elaborate any of the principles enunciated in the headnotes, except those embraced in headnotes 8, 9, and 10.
[8] Possession of land is generally notice of whatever right or title the occupant has. Civil Code (1910), § 4528. Possession is not only notice of the rights of the possessor, but of those under whom he claims. Walker v. Neil, 117 Ga. 733, 745 (45 S. E. 387); Austin v. Southern Home B. & L. Asso., 122 Ga. 439 (50 S. E. 382). The possession of land which will be sufficient to give notice of the occupant's title, or of the title or rights of those under whom he holds, must have some element indicative that the occupancy is exclusive in its nature. Manning v. Manning, 135 Ga. 597 (69 S. E. 1126). Possession by husband and wife is presumptively his possession, but the pre sumption may be rebutted. Civil Code (1910), § 4528. So where husband and wife are in possession of land, and the record title is in the husband, who makes application for a loan upon the property, and by his application asserts title to and ownership of the property, the lender is protected against a secret equity of the wife. Austin v. Southern Home B. & L. Association, supra. So where a daughter lived in the house with her mother, upon lands the title to which was in the mother, and where the mother received the rents and profits of the land, a bona fide purchaser from the mother, while in possession of the land, took its title freed from any secret equity of the daughter. Manning v. Manning, supra. In that case the mother bought the land with money belonging to the daughter and took the legal title in her own name. So where the owner of land lived in a house upon it, together with a man and his wife and child, under an agreement with the wife that if she would board him and do his washing for the remainder of his life the property would belong to her for life, with remainder to her child. Presumptively the possession was that of the legal holder of the title; and where there was no other evidence to rebut such presumption, or to show notice of any right or equity in the woman and her child, this court held that the rule that possession of land is notice of whatever right or title the occupant has would not apply unqualifiedly; and that if a third party purchased the land from the owner bona fide for value and without notice, he would acquire a good title. Hall v. Hilley, 134 Ga. 77 (67 S. E. 428). To operate as notice, the possession must be open, visible, exclusive, and unambiguous, not liable to be misconstrued or misunderstood. It must not be ,a mixed or ambiguous possession. So it has been held that possession of land by the grantee, holding under an unrecorded deed, together with the grantor, is not constructive notice of the unrecorded deed to a subsequent purchaser. Wells v. American Mortgage Co., 109 Ala. 430 (20 So. 136). Where a widow contributed a part of the purchase-money of a farm, and her brother, who contributed the remainder, took title thereto in his own name without her knowledge, it was held that the fact that she lived on the farm with him did not give notice of her resulting trust to a purchaser from him. Harris v. McIntyre, 118 Ill. 275 (8 N. E. 182). The correct rule is that when the occupation by one is not exclusive, but in connection with another, with respect to whom there exists a relationship sufficient to account for the situation, and the circumstances do not suggest an inconsistent claim, then such a possession will not give notice of a right by an unrecorded grant. Rankin v. Coar, 46 N. J. Eq. 566 (22 Atl. 177, 11 L. R. A. 661).
So where a husband and wife were in possession of lands to which the wife held title by the record, it was held that the continuing possession was not notice of an unrecorded deed whereby her title had been conveyed to him. Atwood v. Bearss, 47 Mich. 72 (10 N. W. 112). The possession of a plural wife of a Mormon, along with the possession of the husband and his lawful wife, was held not to be notice of her right to a share of the property, to one who took a mortgage from the husband who held the record title. Townsend v. Little, 109 U. S. 504 (3 Sup. Ct. 357, 27 L. ed. 1012). Where the vendor is in apparent possession, the purchaser finding the title of record in the vendor is not put on further inquiry; and if at the same time another person is also in possession, there is no presumption of title in him inconsistent with that of the purchaser, unless there is some fact or circumstance, apparent to his observation, calculated to excite suspicion of a prudent man dealing with the property that the possessor other than the vendor had some equity therein. Campbell v. Grennan, 13 Cal. App. 481 (110 Pac. 156). When it appeared from the record that McDonald had the title, the proper inference was that the plaintiffs possession was under McDonald and in subordination to the true title. The possession which will be sufficient to put one proposing to purchase real estate from the person having the record title on inquiry, and which will be equivalent to actual notice of rights or equities in another, must be actual, open, and visible, not equivocal or ambiguous, or inconsistent with the title of the apparent owner by the record. Brown v. Volkenning, 64 N. Y. 82; Pope v. Allen, 90 N. Y., 298. The rule may be stated thus: If, of two occupants, one has the record title, a purchaser has the right to assume that the other has no title. Smith v. Yule, 31 Cal. 180 (89 Am. D. 167); Kirby v. Tallmadge, 160 U. S. 379 (16 Sup. Ct. 349, 40 L. ed. 463); Walden v. Williams, 128 Ark. 5 (193 S. W. 71); Thierman v. Bodley, 23 Ky. Law Rep. 756 (63 S. W. 737); Munn v. Achey, 110 Ala. 628 (18 So. 299); 39 Cyc. 760 (1). The possession which will put a purchaser upon inquiry must actually exist at the time of the purchase, and the purchaser is not affected by a possession which has been abandoned before that time. O'Neal v. Prestwood, 153 Ala. 443 (45 So. 251); Aden v. Vallejo, 139 Cal. 165 (72 Pac. 905); Hewes v. Wiswell, 8 Me. 94; Roussain v. Norton, 53 Minn. 560 (55 N. W. 747); Hiller v. Jones, 66 Miss. 636 (6 So. 465); Bingham v. Kirkland, 34 N. J. Eq. 229; Bost v. Setzer, 87 N. C. 182; Boggs v. Warner, 6 Watts & S. (Pa.) 474; King v. Porter, 69 W. Va. 80 (71 S. E. 202); 2 Tiffany on Real Property, 2225.
. The plaintiff does not pretend that lie had the exclusive possession of this real estate. His contention is that his firm, through an agent, rented the same to tenants, and that the possession of these tenants of the firm was notice to Luetta T. Boddie of his rights therein when she bought the property at 200-204 West Mitchell Street. He had managed this property from 1915 to June 21, 1921, under a power of attorney from McDonald. During'that period he secured a loan thereon standing in the name of McDonald, and under this power of attorney he executed the notes and the deed to secure the same in McDonald's name, all of which appeared of record. On June 21, 1921, McDonald revoked this power, and executed a power of attorney to Dorothy Dabney, the daughter of plaintiff, empowering her to manage and control his business and property. Under this power of attorney Dorothy Dabney assumed the- duties imposed upon her, and undertook to exercise the powers conferred upon her by this instrument. She undertook to sell this real estate at 202-204 West Mitchell Street. Plaintiff knew of this. He made no objection. In these circumstances the alleged possession of the plaintiff was not so clear and unambiguous as to be sufficient to put the purchaser upon notice of his alleged secret equity in these premises. His possession can well be referred to his possession as agent for McDonald. Under all the facts and circumstances, the legal title of Luetta T. Boddie ought to prevail over this secret equity of the plaintiff.
[9] On March 23, 1922, plaintiff conveyed to McDonald by quitclaim deed certain described real estate, the same being a portion of the realty involved in this litigation, and known as 110-112 West Mitchell Street, Atlanta. The granting clause declares that the plaintiff, "in consideration of $1.00 and other considerations in hand paid, does forever quitclaim to the party of the second part,' his heirs and assigns, all his right, title, interest, claim or demand, which said party of the first part has or may have had in and to" the land embraced in this deed. Following the granting clause in this instrument is the recital, "This deed made for purpose of releasing all rights acquired under quitclaim deed from Dr. Horace Grant to the grantor herein" to said described real estate. The taxes due the City of Atlanta were not paid, aiid the property known as 110-112 West Mitchell Street was sold under a tax fi. fa. against McDonald for these taxes, when it was bought in by Dr. Grant, who, on Dec. 21, 1916, in consideration of $277, by quitclaim deed conveyed this property to the plaintiff. This property was again purchased by Dr. Grant from the City of Atlanta, which had acquired title thereto under a sale thereof for taxes due for the year 1917. By quitclaim deed Dr. Grant conveyed this property to the plaintiff for the consideration of $278.75. Upon obtaining the above quitclaim deed from the plaintiff, McDonald borrowed upon this property $5,000, securing the lender by his deed thereto. Of this loan $1,500 was paid to the plaintiff as the consideration of his quitclaim deed to McDonald. The purpose of this deed was to put title in McDonald so that he could borrow on this property. McDonald thereafter conveyed this property to Elizabeth Dabney, who is the wife of plaintiff and the sister of McDonald. Under the verdict and decree in this case plaintiff recovered an undivided half interest in this property from his wife. The question is, whether the plaintiff could recover this property in the face of the quitclaim deed which he made to McDonald.
It is now well settled in this State that a quitclaim deed to land does not estop the maker from afterwards setting up, as against his grantee, a title acquired subsequently to the making of said deed. Bivins v. Vinzant, 15 Ga. 521; Morrison v. Whiteside, 116 Ga. 459 (42 S. E. 729); Taylor v. Wainman, 116 Ga. 795 (43 S. E. 58). This is so for the reason that words in releases or quitclaims without warranty of title, -which purport to convey any future interest or title which the releasor or quit-claimer may acquire, are void at law, on the ground that one can not convey any greater title that he has. Such release or quitclaim passes nothing but what the releasor or quitclaimer has at the time. Right ex dem. Jeffreys v. Bucknell, 2 B. & A. 278. A release or quitclaim with warranty of title, which purports to convey what the grantor or the releasor or quitclaim-er may in any manner hereafter have, operates as an estoppel on the ground that it prevents circuity of action. Bivins v. Vinzant, supra. But a quitclaim deed is just as effective to pass any title or interest which the maker has in lands as a deed with warranty of title. Washburn states the rule as follows: "If the grantor have a title to land, a deed of quitclaim is just as effective to pass that title as a deed with covenants of warranty." 3 Washburn on Real Property (6th ed.), 332, § 2239. Professor Washburn further says: "Though in one sense a deed of acquittance or release may be said to be an estoppel, as it is a valid and final bar to all existing claims, and all the possibilities arising from previous contracts of which it imports a relinquishment, it can not affect rights of which the foundation is laid afterwards." 3 Washburn on Real Property (6th ed.), 102, § 1917. In Morrison v. Whiteside, supra, this- court expressly approved these principles. But it is insisted by his counsel that the plaintiff under his quitclaim deed did not intend and did not undertake to convoy to McDonald all his right, title, interest, or claim in the premises at 110-112 West Mitchell Street, but only the particular interest or title which he acquired to said premises under his quitclaim deed from Dr. Horace Grant. In the granting clause of the conveyance from plaintiff to McDonald it is expressly provided that he "does forever quitclaim to party of the second part, his heirs and assigns, all his right, title, interest, claim or demand, which said party of the first part has or may have had in and to" these premises. Following the granting clause is this recital: "This deed made for the purpose of releasing all rights acquired under quitclaim deed from Dr. Horace Grant to grantor herein." It is urged that this recital discloses the purpose of the grantor to convey only the rights which he acquired to this property under Dr. Horace Grant, and that, construing this recital in connection with the granting clause, this instrument must be held to convey only these rights in these premises and no other. According to the plain language of the granting clause, the plaintiff conveyed to McDonald "all his right, title, interest, claim or demand" in this property. This included every right, title, interest, claim, or demand which the plaintiff had in this land. Will the quantum of the estate, or of the right, title, claim, or demand thus conveyed in the granting clause be cut down so as to convey only specific rights in this property obtained under the plaintiff's conveyance from Dr. Grant? In the construction of a deed, the words used shall be taken most favorably against the person using them, and most to the advantage of the other party. The rule has been stated thus: "That all the words of the deed, in construction, be taken most strongly against him who doth speak them, and most in advantage of the other party." Ball v. Wallace, 32 Ga. 170. In the construction of a deed an intention expressed in different recitals will be controlled by the terms of the granting part of the deed. Augusta Land Co. v. Augusta Ry. &c. Co., 140 Ga. 519, 523 (79 S. E. 138). So where a deed recited that it was the purpose of the grantor to give a life-estate to the grantee, with remainder in fee to his children, but in the granting part of the deed a conveyance was made to the grantee and his heirs in fee simple, it was held that the granting part of the deed controlled, and that the grantee took an estate in fee simple. Dunbar v. Aldrich, 79 Miss. 698, 31 So. 341. This recital in this quitclaim deed merely states the purpose which moved the grantor to make it. Such purpose and the estate conveyed are separate and distinct things. To effectuate this purpose the grantor conveyed all his right, title, interest, claim, or demand in the premises; and the extent of the right conveyed will not be cut down by a mere recital of the purpose for which the instrument was made.
Some light will be thrown upon the question of the proper construction of this quitclaim deed, by a consideration of the circumstances under which it was executed. The property embraced therein had been twice sold as the property of McDonald, for its city taxes, the first time in 1916 and the second time in 1917. It had been bought in by Dr. Grant, who afterwards quitclaimed it to the plaintiff. McDonald wanted to borrow $5,000 thereon. To do this he had to acquire from the plain tiff tlie title which he had acquired by the quitclaim deed from Dr. Grant. Thereupon plaintiff executed to McDonald the quitclaim deed involved in this discussion, and to induce him to quitclaim the property to McDonald the latter paid him from the proceeds of the loan which he obtained the sum of $1,500. It is hardly conceivable that it was the'purpose of the plaintiff merely to convey the rights which he acquired in this property under his quitclaim deed from Dr. Grant, and not to convey his rights under the implied trust which he seeks to set up and enforce in this case. To impute to him the latter purpose would be to charge him and McDonald with fraud. So we are of the opinion that the plaintiff in this case is estopped by his quitclaim deed from asserting title to the premises at 110-112 West Mitchell Street. It follows that the finding in his favor of the one-half undivided interest in this property is contrary to law, and a new trial should have been granted on this ground.
[10] An implied trust arises when the legal title is in one person, but the beneficial interest, either from the payment of the purchase money or other circumstances, is either wholly or partially in another. Civil Code (1910), § 3739. Whenever the circumstances are such that the person taking the legal estate, either from fraud or otherwise, can not enjoy the beneficial interest without violating some established principle of equity, the court will declare him a trustee for the person beneficially entitled, if such person has not waived his right by subsequent ratification or long acquiescence. Civil Code (1910), § 3780. Where land is bought for a firm, paid for with money of the firm, and the title is conveyed to one of the members of the firm, an, implied trust arises in favor of such firm. The members of the firm become equitable owners and tenants in common of such land. Cottle v. Harrold, 72 Ga. 830 (3); Roach v. Roach, 143 Ga. 486, 488 (85 S. E. 703). The trust which arises in these circumstances in favor of the partnership is not destroyed by the express verbal, and therefore unenforceable, agreement of the partner in whose name the title is taken, that he will hold the land for the use of the firm. While such parol agreement can not be enforced as an express trust, the implied trust arising under these circumstances will be enforced by a court of equity. Jackson v, Jackson, 150 Ga. 544, 549 (104 S. E. 236). Not withstanding such agreement, the resulting trust may be proved by matter not in writing. Poulet v. Johnson, 25 Ga. 403, 411; Jackson v. Jackson, supra. It is urged, however, by counsel for the defendants, that, where various tracts of land are purchased under these circumstances, it is incumbent upon the partner who is seeking to set up and enforce such trust to show the specific amount of his funds which went into the purchase of each tract, where both partners contributed funds toward their purchase. Ordinarily, where one person seeks to enforce an implied trust in land because it was paid for in part by his money and title thereto was taken in the name of another, he must prove the amount of his money so used; but where real estate is purchased with funds of a partnership, contributed by both members, and title is taken in the name of one of the members under an agreement that he is to hold the same for the use of the firm, this rule does not apply. Equity will treat the lands as partnership assets; and the partner seeking to enforce the implied trust arising under these circumstances will not be required, to show the specific amount of the funds contributed by him to the partnership capital which went into the purchase thereof. The rights of the respective partners in such realty will depend upon the final accounting between them, upon the dissolution of the firm for any cause.
Under the principles announced, the judgment in the main bill of exceptions must be reversed, and that in the cross-bill of exceptions affirmed.
All the Justices concur, except Bussell, G. J., dissenting.