Case Name: Southern Building & Loan Ass'n. v. Page et al.
Court: Supreme Court of Appeals of West Virginia
Jurisdiction: West Virginia
Decision Date: 1899-04-08
Citations: 46 W. Va. 302
Docket Number: 
Parties: Southern Building & Loan Ass’n. v. Page et al.
Judges: (ENGLISH, Judge, dissenting.)
Reporter: West Virginia Supreme Court
Volume: 46
Pages: 302–318

Head Matter:
CHARLESTON.
Southern Building & Loan Ass’n. v. Page et al.
(ENGLISH, Judge, dissenting.)
Submitted January 19, 1899
Decided April 8, 1899.
1. WARRANTY Deed — Title Conveyed — Rights of Grantee — Title Bond.
A general warranty deed, without limitation, reservation, or exception conveys all the grantor’s right, title and interest, both legal and equitable, in and to the property embraced therein, including the right of retention of the title to secure the unpaid purchase money due and owing from a prior recorded title-bond purchaser of an undivided interest in such property, and operates as a transfer of such unpaid purchase money to the grantee;, and after due recordation of such deed, and notice thereof, such title-bond purchaser cannot pay such unpaid purchase money to his vendor, the grantor in such absolute deed, except at his own risk and peril, but must pay the same to the grantee before he1 can demand conveyance of the retained legal title. Turk v. Skiles, 4SW. Va.,82. (p. 30S.)
2. Warranty Deed — Title Bond — Rights of Grantee — Fraud.
It is a fraud upon the grantee in such deed, after delivery and recordation thereof, for the grantor to receive payment of such unpaid purchase money; and such title-bond purchaser must take notice of the recorded condition of the legal title, and he cannot take advantage of such fraud without becoming a participant therein, (p. 306.)
3. Deed — Equity of Redemption.
The subsequent deed of a grantor, who has by a prior deed conveyed the legal title in trust, can operate only to convey the equity of redemption until such prior deed is released, (p. 306 )
4. Equity — Lien—Title.
If a person is induced to advance the money to pay off a trust lien on real estate on the assurance that the title to such property is otherwise clear, and take a new trust to secure the money so advanced, and it afterwards turns out that the. title to such real estate is incumbered by title bond, judgment lien, or otherwise a court of equity will keep the original trust alive as a security for the money so advanced, (p. 30V.)
5. Equity — Lein—Fraud.
In such case the person advancing the money is not a volunteer or an intermeddler, but is the confiding dupe of the fraudulent representative of the borrower, (p. 308.)
6. Lien — Title-Bond.—Rights of Purchaser.
The subsequent incumbrancer or title-bond purchaser cannot take advantage of the fraudulent practices of the borrower, nor object to the restoration of the prior trust, as he is not injured thereby; but he is left in the same condition he was in prior to the attempted fraud, and this is all he is entitled to ask of a court of equity, (p. 309.)
Appeal from Circuit Court, Cabell County.
Suit by the Southern Building- & Loan Association against J. Harvey Page and others. Decree for defend*ants, and plaintiff appeals.
Reversed.
Simms & Enslow, for appellant.
Campbell, Holt & Campbell, for appellees.

Opinion:
Dent, President:
The Southern Building & Loan Association appeals from a decree of the circuit court of Cabell County, refusing to subject certain property of defendant W. C. Miller to payment of its lien. Defendant J. Harvey Page, by deed dated the 11th day of March, 1892, conveyed the whole property in controversy, in trust, to secure the plaintiff a loan of five thousand dollars. An undivided half of this property was claimed by Miller by virtue of a title bond placed on record some time prior to plaintiff's deed. The following further statement of facts is taken from the brief of plaintiff's attorneys, to wit:
"Prior to March, 1899, J. Harvey Page and W. C. Miller were engaged in business in Huntington under the name of Page & Miller, and as such partnership had borrowed from the Ohio Valley Building & Loan Association the sum of $3,900. Under contract made between said Page & Miller upon the 6th day of February, 1890, J. H. Page agreed, in consideration of his partner (W. C. Miller) paying off the amount of a lien given by Page upon the property in controversy to the Ohio Valley Building & Loan Association at $3,900, that then he (Page) would under certain conditions transfer an undivided one-half interest in the property on the Ohio river in the city of Huntington to the said W. C. Miller. It appears from the testimony of Miller that Miller paid all the sums due the Ohio Valley Building & Loan Association, with the exception of $1,-541.26. Whether these dues were paid by the firm of Page & Miller out of the firm fund, or the exact amount of dues paid, is not certain; but on the day of settlement with the Ohio Valley Building & Loan Association of the partnership on the property, there was the sum of $1,541.23 due it. While the partnership of Page & Miller still existed, and while Page had' the authority to .sign the firm name, J. H. Page applied to the Southern Building & Loan Association for a loan upon certain stock standing in said association in the name of Page <& Miller, on which stock different pay-menls had been made by Page & Miller from time to time. When Page applied for this loan on the Page & Miller stock, he was told that, as he wanted to give his individual property as security, he had better have the stock transferred to his individual name, which was done by Page transferring the stock in the name of Page & Miller to himself. and having a new certificate issued in the name of J. H. Page. At the time this loan was made by the Southern Building & Loan Association, J. H. Page swore that the title to the property was in him, that it was not questioned, and that the only incumbrance on it was $1,500,, which was the incumbrance of the Ohio Valley Building 3s Loan Association. At the time this statement .was made the existence of the title bond made by Page & Miller, which was the foundation of Miller's claim, bearing date the 6th day of February, 1890, and recorded February 25, 1890, was unknown to the Southern Building & Loan Association or to its attorneys. Under this title bond and contract Miller had assumed to pay the entire amount due the Ohio Valley Building & Loan Association on the property, so as to clear the same of all incumbrances, in consideration of the sale to him of an undivided one-half interest. This contract provides that if the said Miller in any case should fail to pay the entire balance due the Ohio Valley Building & Loan Association, and have the trust deed released, then the said Page was to discharge the balance remaining,, and cause the said deed of trust to be discharged and released, and should convey to the said Miller such proportion of the undivided one-balf interest as the book value of the 30 shares of stock by the said trust deed named at the time of Miller's failure bore to the face value of the said bond. The face of the bond was $3,900. The balance due at the time of Miller's failure to pay was $1,541.26, discharged out of the funds furnished by plaintiff."
Plaintiff claims it is entitled to enforce its lien against the whole of the property involved for two reasons: (1) Because defendant Miller, by 1 is conduct, is estopped from setting up his title bond; and (2) by virtue of subrogation to the released lien of the Ohio Building & Loan Association.
As to the first it is sufficient to say that Miller's title bond was on record, and there is nothing in this case showing that, prior to the loan made by the plaintiff, he did anything to mislead the plaintiff as to the title of the property. Williamson v. Jones, 43 W. Va. 562 (27 S. E. 411). In Bigelow, Estop, p- 294, it is said: "It is settled law that standing by in silence will not bar a man from asserting a title of record in the public registry or other like office so long as no act is done to mislead the other party. There is no duty to speak in .such a case." In a note numerous cases are cited to support the test. It is hardly necessary to repeat them here, as the records of the proper office are the best notice of title, and, if they speak for a person, he is under no obligation to speak for himself. The facts and circumstances are not sufficient to justify relief on the grounds of estoppel.
Nor is it necessary to subrogate plaintiff to the released lien of the Ohio Building & Loan Association. Section 2, chapter 72, Code, referring to general warranty deeds, provides: "Every such deed, conveying lands, shall, unless an exception be made therein, be construed to include all the estate, right, title and interest, both at law and in equity, of the grantor in or to such lands." The deed of defendant Page to secure plaintiff was such a general warranty deed, and conveyed to the trustee, Martin, all the estate, right, title, and interest whatever, both in law and equity, of the grantor, Page, in and to the property. It conveyed, not only his undivided half, but also the undivided half of Miller, subject to the terms of the title bond; thus fully investing the trustee with the legal title to Miller's half until Miller should comply with the conditions of his bond, which was to pay off the debt due the Ohio Building & Loan Association, at that time amounting to one thousand five hundred and forty-one dollars and twenty-six cents. In short, by his deed,, Page substituted the plaintiff to all his reserved rights in the title bond to Miller. Plaintiff thereby became entitled to the provision that, if Miller failed to pay off any portion of the balance due the Ohio Building & Loan Association, he was only to have his fair share of the property, .and also the covenant that Miller would pay off and discharge the association lien, with the right to compel him to do so. The payment of the lien out of the funds furnished by the plaintiff inured to the benefit of its trust deed. It matters not who is regarded as making the payment; for, if Page had made the payment out of his own funds, other than those furnished by the plaintiff, such payment would inure to the benefit of the plaintiff, for he had not only obligated himself to do so, but it is the .settled law that where a person makes a general warranty deed for land, and afterwards acquires any manner of interest therein from others, it inures by estoppel to the benefit of his grantee. Bigelow, Estop. 384. The release, therefore, of the trust deed of the Ohio Valley Building Association inured to the benefit of the plaintiff, and not to Page, and he had neither the moral, legal nor equitable right to receive or demand from Miller the sum paid in discharge of such; lien, but all his right thereto was vested in the plaintiff, and the legal title to the whole property was vested in the trustee for the plaintiff's benefit,, .subject, alone, to the title bond.
Nor had Miller any longer the right to pay Page the-one thousand five hundred and forty-one dollars and twenty-six cents, and compel a conveyance of the property. Page had nothing left to him but a mere equity of redemption* and all that Miller took by Page's deed was such equity or redemption, which in no manner could effect the legal title vested for plaintiff's benefit and security. Page's deed adds nothing to Miller's title bond, and cannot do so until the legal title is released from plaintiff's lien. Miller1 now holds nothing in the property but a recorded equitable- interest, subject to plaintiff's prior equity and legal title. Plaintiff's equity is prior, because its funds were used to pay off tbe debt that Miller obligated himself to pay; and, as such debt was a lien prior in right to Miller's equity, plaintiff is entitled to the benefit of such priority, and before Miller can ask, he must do, equity. Plaintiff's trust deed was placed on record immediately, and furnished Miller constructive notice as to where the legal title was, and in addition he had actual notice, as shown by the proof that plaintiff had furnished the money to pay his debt, and that Page had given a deed of trust on all his (Page's) interest in the property to secure plaintiff, at least prior to the time that he claims to have paid Page said sum of one thousand five hundred and forty-one dollars and twenty-six cents; and, having such notice, he could not pay such sum to Page, except at his own risk and loss, but it was- his duty to pay it to plaintiff, holding the legal title. Otherwise he could not demand from plaintiff the conveyance or release of the legal title. The court, therefore, erred in holding that the plaintiff held title to only a one-half undivided interest in the property, but it should have held that the legal title to the whole property was vested in the trustee for plaintiff's benefit, subject to Miller's equitable right* under his title bond to pay to plaintiff said sum of one thousand five hundred and forty-two dollars and twenty-six cents, with interest from the 28th day of June, 1892, until paid, 'and thus obtain a release upon his one-half undivided half from the lien of plaintiff's trust, and on his failure to pay the same to subject such undivided half to the payment thereof. "As long as the legal title to lands is retained, a lien for the purchase money exists." Roush v. Miller, 39 W. Va. 638. (20 S. E. 663); Finley v. Arm-Strong, 23 W. Va. 113; Poe v. Paxton's Heir's 26 W. Va. 607.
Miller's defense in this cause has been conducted on the theory that the legal title to this property was in Page, and passed by his deed. This is certainly not _ the true; state of the title, as heretofore shown. What excuse, then* can Miller give for asking the court to devest the plaintiff' of the title, and to invest it in him. Under Page's deed beholds only the equity of redemption. Under his title bond he must show payment of the purchase money before he; can ask a conveyance. He says: "I paid Page." The plaintiff answers: "When you did so, not only did you have constructive notice that Page had conveyed away his whole interest in the property, not only did you have facts and circumstances to put you on your guard, but you had actual notice that plaintiff's money had been used under a false pretense to pay your debt, to secure which he had undertaken to convey, not only his, but your, interest in the property." While Miller states in Ms deposition that he did not know at the time it was done that Page intended to convey away his interest in the property, neither in his deposition nor his pleading does he deny that at the time he paid Page the one thousand five hundred and forty-two dollars and twenty-six cents he had full and complete notice and acknowledge of plaintiff's trust deed. This is a matter that devolved upon him to show to justify such payment and relieve him from imputation of an after attempt to secure the benefit of Page's fraud, and thereby become a participant therein.
Wdiile the plaintiff has the right, legal and equitable, to retain the legal title until the purchase money is fully paid, if such were not the law, it would undoubtedly be entitled to subrogation to the lien of the original deed of trust of the Ohio Valley Building Association to the extent of such purchase money. This is owing to the fraud practiced on it by Page. It was induced to furnish this money on the false representation by Page that he was the owner of the property, and that it was free from all other incumbrances. His statement in this regard was sworn to by him, and was made as an inducement to get the loan. In the case of Sidener v. Pavey, 77 Ind. 241, it is held that under such circumstances the subsequent mortgagee is neither a meddler nor a volunteer, nor his payment voluntary, who furnishes money to pay off a prior deed of trust or mortgage, on the representation that the property is otherwise free from in-cumbrance, and that against all such other incumbrances he is entitled to be substituted to the lien of the incum-brance his money was used in satisfying.
It is also held that "if a formal discharge of a mortgage has been obtained by fraudulent means, it is no payment and discharge of the mortgage, and a subsequent lien hold er, whose rights existed at the time of such discharge, cannot object to the prior mortgagee being restored to his rights." And in such cases of fraud and mistake a third person who pays the mortgage at the request of the debtor, and takes a new mortgage for the same debt, will be subro-gated to the rights of the original mortgage as against intervening incumbrances existing at the time of the cancellation of the first mortgage. Jones, Mortg. sections 2, 876-878; Hyde v. Tanner, 1 Barb. 75; Mosier's Appeal, 56 Pa. St. 76; McCormick's Adm'r v. Irwin, 85 Pa. St. 111; Payne v. Hathaway, 3 Vt. 212; Snelling v. McIntyre, 6 Abb. N. C. 469; Green v. Milbank, 3. Abb. N. C. 138; Gerwig v. Sitterly, 56 N. Y. 214; Paterson v. Birdsall, 64 N. Y. 294; Cole v. Malcolm, 66 N. Y. 363; Barnes v. Camack, 1 Barb. 393; Carter v. Taylor, 3 Head, 30; Matterson v. Thomas, 41 Ill. 110; Barnes v. Mott, 64 N. Y. 397; Haggerty v. McCanna, 25 N. J. Eq. 48; 21 Am. & Eng. Enc. Law 294.
Many other authorities might be cited in favor of this well-settled doctrine, but it is unnecessary to do so in this case; for, as heretofore held, the plaintiff's trustee holds the legal title to the property for plaintiff's benefit until Miller pays off the vendor's lien existing against the same at the time Page conveyed away his whole interest in the property, both legal and equitable, to such trustee. The decree is therefore reversd, and a decree entered in favor of plaintiff against Miller's half of said property for the sum of one thousand five hundred and forty-two dollars and twenty-six cents, with interest from the 28th day of June, 1892, until paid, and this cause is remanded for further proceedings.