Court Opinion

ID: 7280801
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:08:16.872722+00
Date Added: 2024-06-11T16:19:01.803713
License: Public Domain

FREEMAN,. J.,
deliyered the following dissentiqg-opinion:
•This bill is filed to assert a vendor’s lien for payment of a balance of purchase money of about $4;(M)0,. due. by note, signed by W. X). Fly and J. L. Branch. The note is not , produced, but is sued on as a note lost or mislaid.
The . facts necessary to be stated on this, -branch of' the case are, that Lannum sold the land, in controversy to Sharp, and -made him a "deed which was never registered. Sharp sold to Clements and Hale,, and they ,to Fly. When the last sale was made the-parties met; and by mutual agreement the deed from Lannum to Sharp, and title bonds given in the other-gaje to Hale: and Clements, and assigned to Fly, were taken- up. Lannum -made a deed direct to Fly, and Fly gave the ,nqte -in controversy to Sharp in' discharge or satisfaction of the amount due from Clements and Hale 1 to , Sharp,, or ■ rather assumed . their debt, *28giving this note for it. The deed of Lannum is ■September 3, 1866; no lien is retained on the face of it for payment of the purchase money, the deed having the usual recital of its payment. Fly was deemed wealthy at this time, but failed in a few months afterward, making an assignment in the form of several deeds of trust, December 14, 1860, to W. A. Jones, trustee, to secure a large amout of existing indebtedness to E. M. Apperson & Co., and also are to secure a contemplated advance to Fly of $25,000. The war coming on soon after, no money was ever advanced under this arrangement, so that this deed is •out of the case at present. The case is clearly that of a deed of trust conveying this land as a security for a pre-existent debt, and must be decided on this issue.
Before entering on this discussion it is proper to dispose of the question presented in argument as to whether the lien was not waived by taking the note of Fly with Branch as surety. .It suffices to say on this, that taking such surety on the note would raise a presumption of waiver of the vendor’s lien, nothing more appearing. This presumption, however, may be rebutted by showing that such was not the intention of the parties. That such was not the intention in. this case is made out beyond question by the testimony of Branch, showing that a lien was retained on the land in the face of this note thus signed. There is no evidence, so far as we have seen; to contradict this statement.
This brings us directly to the main question inti*29mated above, as to whether a vendor’s Hen, given bylaw, where the land is conveyed by deed, can prevail' over a conveyance or assignment made and recorded to a trustee, with power to sell the property and appropriate proceeds to the payment of pre-existing debts-In other words, whether an assignment as security for a pre-existent debt will take precedence of and override the vendor’s lien given by law for the payment of unpaid purchase money.
We now proceed to the discussion of the question on principle and authority. What, then, is the nature of the right of a vendor of land by which he can ask a court of equity to decree its sale for the satisfaction of his debt, and an appropriation of its proceeds to its discharge? When does this right arise and begin to be, at the time of the sale or by filing a bill or bringing a suit? Does it spring up out of the contract of sale, or is it the result and product of suit brought? These questions have in them the elements for the solution of the question involved, if reasoned out in accord with sound legal analogies.
In the leading case, Macreth v. Symmons, decided by Lord Eldon in 1808, 1 Lead. Cases in Eq., 340, the principle was laid down as the then established doctrine of the courts of equity in England, that the vendor’s lien for purchase money unpaid will be enforced against the vendee, volunteers and purchasers with notice, or having equitable interest only, even though a receipt was given or endorsed on the back of the deed, unless this lien was shown to have been relinquished by the vendor. This case was one greatly *30considered by the Lord Chancellor, and decided after exhaustive examination of the previous' decisions of the court. The doctrine had been put before this in the case of Pollexfen v. Moore, 3 Atkins, 272, L. C. Eq., 344, by Lord Hardaricke, on the ground that the “ vendee was, from the time of the agreement ■ or contract of sale, a trustee as to the purchase money for the vendor.” We cite this case to "show how the' doctrine has been fixed in .the jurisprudence of En-’ gland, from which country we derive it. Since then it has never been doubted, we believe, in that coun-1' try. The cases are cited in Leading Cases in Eq., vol. 1, 359, and the rule stated that this lien pre-1 vails against all persons claiming under the vendee,-except innocent purchasers without notice who havé-paid their money and procured the legal title. Lr accordance with this view it is held that the assignees of a bankrupt will be affected by the lien, although they may have had no notice of its existence, they taking subject to all the equities attaching to the estate in the hands of the bankrupt. So also will the assigns under a general as-ignment for the benefit of creditors. L. C. in Eq., vol. 1, 361; Bro. C. C., 302. In notes of the American editor the same doctrine is laid down as prevailing in most of the States of the Union, though some courts recognizing it, considered it a doctrine contravening, the general policy of this country against secret liens. Ibid, 362-3, et seq. So in this State as early as 1831, in the case of Hoss v. Whitson, 6 Yer., 52, these doctrines were held as established beyond all doubt, citing numerous *31«ases, both. English and American. In all the cases it is worthy of remark the right of the vendor is spoken of as a lien, and one growing out of the contract of sale. In the cases Sheratz v. Nicodemus, 7 Yer., 9, and High and wife v. Battle, 10 Yer., 106, this court held this lien to be a specific one in the' nature of a mortgage attaching, says the court, “specifically to the land, whether in the hands of the: original vendee or of a purchaser from him with no-, tice.” In the latter case, decided in 1836, it was¡ held that no judgment need be obtained at law in, order to ascertain the amount of the debt against the personal representative of the deceased vendee, but that the bill would lie against the land, making the-heirs alone’ parties, and this on the principle that the “land was debtor, whether in the hands of the ven-dee or his heir.” Ibid, 188. In this form the doctrine was introduced into our State, and thus imbedded in our jurisprudence. Thus it stood, too, at the time, and long aiter our system of registration had been established and substantially perfected.
These principles being established, it follows that this right is a substantial one, as old as the equity jurisprudence of England, and at an early day fixed into our own system. It is also clear, both on reason and authority, that it springs out of the contract of sale, and results from it, and ^attaches to the land, the land becoming debtor from this period. If it does not spring up at the time of the contract of sale in the nature of things, when does it spring up? In every bill filed to enforce it, whether you call it *32a lien or an equity, the facts to be charged are, that land had been sold, the defendant had purchased and the purchase money remained unpaid. These allegations are always followed with a prayer for an enforcement of the lien growing out of the facts stated,, by a sale of the land subject to the charge. Without the allegation of such a sale, no lien would appear, and with this allegation it is uniformly recognized and enforced. Why, then, by a mere change of name, calling it an equity, assume a change of the nature of the right? Is not such an assumption purely arbitrary, with no reason to be given for its basis? Is it not more in accord with the history of this lien and its nature, to say that it is a lien, a long recognized right given to the vendor of land by a court of equity, enforeible as such equitable rights are enforced in a court of chancery, because not recognized in courts of law. We think that it is as substantial a part of the contract in our law as is the note given for the purchase money, and attaches at once in favor of the vendor on completion of the contract. If this be so in principle and authority, how can he be deprived of it? Alone, as we think, by one having a superior equity, such as an innocent purchaser for value; one who has paid his money, parted with something innocently on the faith of -the land with no notice of the existence of the lien, or as in case of Gause v. Chester, 5 Yer., 207, where the deed of trust had been executed by sale of the property before the bill filed, on some similar ease.
Thus stood the law in our State, when the ques*33tion was for the first time distinctly presented as to which should succeed, the vendor with his lien, or the-trustee and beneficiaries holding the property under a registered conveyance in trust to pay pre existent debts. In that case the argument of Mr. Cooper was based on the proposition, fir.-t, that creditors claiming under a voluntary conveyance made to a' trustee to secure pre-existing debts, were not “creditors and purchasers-under the registration laws; and second, that the vendor’s lien would be-enforced against such a conveyance, when his bill was filed before any steps taken in enforcement of the trust;” in other words, as he states it: “creditors claiming under a trust conveyance take the property conveyed, subject to any equity which might have been enforced against it in the hands of' the assignor.” The court, Judge Turley delivering the opinion, states the point decided by the court, in the following emphatic language — language too clear to be misunderstood: “The only question we deem necessary to notice in this case is, whether a vendor of' land, when the purchase money has not been paid,, can enforce his lien therefor against a trustee and cestui que trust, when the land has been conveyed to-secure debts, when the bill is filed for that purpose before the trust is executed.” “We have no doubt,”' says the learned judge, “ that he may.” ITe then refers to the case of Pettigrew v. Turner, 6 Hum., 440, as virtually deciding this- same question, and then refers to Mr. Cooper’s argument as exhausting the subject for the reasons in support of the decisions made.
*34Thus stood the law until the dicta of Judge McKinney, in the case of Green v. Demoss, 10 Hum., 376, where he states the result of the decision of Brown v. Vanlier to have been, that the lien was held to prevail against a voluntary assignment by deed of trust for benefit of antecedent creditors, where the bill is filed before anything is done in execution of the trust, or in other words he adds, “before the trust is accepted, as was the meaning intended to be conveyed in that case.” With deference to the statement of Judge McKinney, it is clear the court intended no such meaning as he gives to the word executed, as the idea of acceptance by the creditors under the deed; no such question was before the court, nor could have been, on the facts in Vanlier v. Brown. Besides, the court expressly say, that the lien shall prevail, if the bill is filed before the trust is executed, not before the assignment is accepted; thus going further than Mr. Cooper’s proposition, that is, before any steps were taken to close the trust — a proposition not well in accord with the main one that follows, that the conveyance is subject to every equity which might have been enforced against it in the hands of the assignor; for if this be the nature of such an assignment, then until the property had been freed from it by a sale in execution of the trust, no preliminary steps could be held to have any effect on the rights of the parties.
This view of the case of Vanlier v. Brown is taken with emphasis and sustained in an opinion delivered by Chief Justice Headeriek at last term of this court at Nashville. See MS. opinion, Washington v. Ryan et al.
*35In this case of Demoss v. Green, we believe for the first time in our reports, is introduced the idest' of the vendor’s right being a “ mere equity,” and not a specific lien on the land until a bill is filed to enforce it. No authority is cited by the learned judge for this distinction. The eases we have cited on tins'subject in Tennessee definitely lay down a contrary doctrine, that is, that the lien is a specific one on the land, and in some it is said in the nature of a mortgage.
This distinction cannot be maintained, we think, upon any sound principle or legal analogy. If it is not a lien on the land, or if the language is preferred, an equity fixed on the land growing out of the' sale, then on what does it fix itself? Is it a lien, or equity, or charge on nothing, that simply exists in idea, until the vendor shall locate it by filing his bill to enforce it? Is it not rather an incongruous view of such a right, that a contract must be alleged by which land has been sold and purchase money unpaid, and then as soon as such a proceeding is instituted' and bill filed, immediately the equity locates itself against the particular land, but was unlocated and unfixed before. In other words, that a vendor can raise a right and make it specific on land, that is, attach it to land as a charge, by simply filing a bill for that purpose, alleging a contract of sale and the purchase money uupaid? Upon all sound legal analogies a suit is commenced to enforce an existent right, not to create it. A suit to enforce a lien or equity by sale of particular property, necessarily involves the *36pre-existence of the right sought to be enforced. In fact, such is the basis of all 'bills filed in our courts to sell land for payment of the purchase money. It is generally conceded that if this lien be specific, (hat is, fixed on the land by virtue of the contract of sale, then it must override the right of a voluntary assignee. That it is so fixed and specific is clear, as we think, or else it is a lien existing on nothing, a charge with nothing charged,- an equity with nothing subject to it, each proposition involving a legal contradiction. We therefore conclude the lien is specific, fixed and fastened on the land by the contract. It is true, in. the case of Fain v. Inman, 6 Heis., the learned judge delivering the opinion of the court follows in his reasoning the theory of Judge McKinney, in Green v. Demoss, but the case before him did not raise the question, and consequently it could not have been decided by the court. This is clearly seen by the statement of the question under investigation in commencement, of the opinion, which is as follows: “The controversy is between the vendor of land who has sold and conveyed without an express reservation of the lien, and who seeks to assert his lien for purchase money unpaid, and the purchaser at a trust sale under the trust deed of the vendee made and foreclosed before the filing of the bill.” The case of Gann v. Chester, 5 Yer., had settled this question, and no other was before the court; so that we have no difficulty in that case as an authority in the present, the questions being entirely different. In this case the vendor’s bill is filed before a sale under the trust deed, and is precisely *37the ease of Brown v. Vanlier, where it was held that the vendor should prevail.
We would arrive at the same conclusion, reached above, from the position and character of the claim of a trustee and the beneficiaries under the deed of trust. What is the trustee but a voluntary assignee of the vendee? He is not a purchaser at all, much less an innocent purchaser. While the naked dry legal title is conveyed to him, he is still but an as-signee with a power to sell and appropriate to the payment of debts. He is so treated in all our standard writers on the subject. Mr. Story, Eq. Jur., see. 1288, says: “The lien will also prevail against assignees claiming by general assignment under the bankrupt and insolvent laws, and assignees under a general assignment made by a failing debtor for benefit of creditors, for such assignees are deemed to possess the ■same equities only as the debtor himself.” So it is said by Mr. Burrell, in his work on assignments, p. 352, the conveyance conveys the property “in the same plight and condition as the assignor held it, and will not defeat the pre-existing liens, nor can the trustees be regarded as purchasers, • nor the cestui que trust creditors within the Registry Acts.” Mr. Perry says, ^as a matter of course, all persons having liens on the trust property prior to the assignment are not affected by it — their rights remain as before the assignment.” Section 596.
These authorities and many more that might be cited, accord precisely with the view we have taken ■of this question. We add, that according this right *38of the vendor to be properly but an equity, the same result would follow, for all agree that a bona fide furchaser of property, purchasing and paying his money with notice of an equity, would take subject to the .equity, and certainly all the cases and authorities hold this in case of a vendor’s lien; all authorities agree that if he purchases without notice, he takes the property fund from the equity. Then the only question is, whether a voluntary assignee is an innocent purchaser or equivalent to one. On this question there has never been a doubt, we believe, and it is universally conceded in this State that he is not an innocent purchaser. If not, then he takes subject to the equity, unless he is protected by registration laws; and this is not insisted on, for if he were within this protection he could at once interpose this as a certain and available defense and thus end the contest.
But it is said, that the opposite view is more in accord with the spirit of our registration laws. Perhaps this may be so, but it is clear beyond all question, and we believe is conceded, that the trustee and beneficiary are not within their provisions. They are not the creditors referred to in these laws, nor are they bona fide purchasers without notice, as therein provided for. If they were, then the statute would give the protection and the controversy, as we have said, be at an end. If not included in these laws, may it not be plausibly argued that as the law stood at their passage, with the lien well recognized as a specific charge on the land, the omission to provide for the case left the rights of the parties to stand *39precisely as if no such law had been passed ? or even amounted to a legislative affirmance, that the law should not be changed as to this question by these laws. The expression of one thing may fairly be held to exclude the other not included in it; not being included in the provisions of our registration laws, not being innocent purchasers or purchasers at all, on what higher ground can these creditors stand than the vendor whose purchase money is unpaid?- He, too, is a creditor with a lien or an equity. His lien is prior in time to the assignment. It has in it the highest equity, being the price of the very land sought to be appropriated by the voluntary assignment to the trustee for the benefit of other creditors. Ought this land to be taken as the vendee’s and appropriated by his voluntary act to the payment of other debts before he has paid for it himself? The trust creditors have paid nothing for the land, have parted with nothing, hold their debts as before the conveyance; the trustee has paid nothing and is only a voluntary assignee, an agent of the vendee and creditors for sale of the land, technically clothed with the legal title and charged with the trusts of the deed, but nothing more. If the land shall sell for more than the debt secured, the vendee is entitled to the surplus. If the debts are discharged, either by the assignee paying them before closing the trust, or by a sale of part of the property, or in any other way, the property returns to the vendor or assignor without a reconveyance in our Slate. See 3 Head.
Some stress seems laid on the fact of acceptance *40of the deed of trust as favoring the position of the beneficiaries. We cannot see the force of this. Acceptance of the benefits of the deed is but an assent to the assignment for his benefit. But the assent to & wrong or proposed wrong done to the rights of another, cannot sanctify the wrong nor raise an equity in favor of the party so assenting, superior to the right of the party being wronged. This must be the result in order to maintain the conclusion sought from the fact of acceptance. Under these circumstances, we confess we are unable to see the superior equity of the assignee and beneficiaries under such a deed. We think the simple question is, whether a vendee can by his voluntary act defeat the lien given by law to the vendor for his purchase money, and create or confer a higher right than he himself has on mere volunteers to the property assigned. We think all the analogies of law and the soundest principle forbid this being done.
While there may be some difficulties presented arising out of this view, yet not more nor so many as from the opposite, and we think it sustained by the large weight of authority and by the sounder reason. It is true the^e may possibly arise a case where a careless creditor may take a deed of trust to secure his debt and agree to delay, in consideration of the security, in ignorance of the existence of the lien for unpaid purchase money. But this need not be, if he uses common diligence, as the assumption is, that he is wronged by the existence of the vendor's deed registered, which shows no lien. He can easily enquire *41of the vendor whether the land has been paid for. If he learns it has not, he has notice and cannot complain. If the vendor should mislead him by a false statement, he would be estopped to enforce his lien and the party be protected. We can see no great weight in such a possible injury as has been supposed.
I think there are incongruities unreconcilable with settled principles in the opposite view. A vendor has sold his land on a credit; the first note may not be due so as to file his bill “to locate” his equity; a creditor at large who has a note on the vendee asks it to be secured by a deed of trust. His note may not be due. He holds his note, does not give time or part with a single right under his contract; the land is conveyed to a trustee for his benefit. The vendor comes into a court of equity to enforce his lien for the purchase money; the holder of his note files his cross-bill to enforce the deed of trust and takes the land and the vendor goes unpaid. Is not this a case where a man should be required to do equity before he a-ks it? I thiuk so. But a stronger case may be put. The other debt may hare been the consideration money or balance of such consideration, due for a tract of land sold to the vendee. The party having this balance may have already enforced his lien or had a decree to sell, when the vendor in the other case makes his contract. He may sell and buy the land for half his debt. He can then, having an execution or right to one, coerce the vendee to convey the land by deed of trust, accept what he has thus *42obtained, and thus, after having had his .own lien enforced, fix his debt on the other land sold, and defeat the vendor’s claim for payment. Surely this is not equilable or just. He is not an innocent purchaser, only a volunteer; but accepting the conveyance to a third party for his benefit, with no superior equity whatever, he gets a higher right than his debtor and assignor had, and by some influence not to my mind apparent, shakes off the equity of the vendor for the payment of his purchase money — an equity as old as. the equity jurisprudence of England. He has parted with nothing for this advantage, paid not a cent, nor-lost a single thing for which he bargained when his debt was created. His debt may well have been created before the purhcase of the land by his debtor- and therefore not on the faith of it. These, with many other difficulties, I am totally unable to reconcile.
Again, it has long been settled in this State, that the suspension or satisfaction of a precedent debt is not a sufficient consideration to give the endorsee of a bill or note the position of an innocent holder for-value as against the equity of a third party enforceable against the endorser. The reason is, the en-dorsee parts with nothing, gives neither credit, money or goods for the note, sustains no loss or incurs any new liability. 1 Hum., 468; 2 Hum., 192. In the case of Rhea v. Allison, 3 Head, 180, the court say, the same principle is applicable to real estate, and add: “ If any distinction as to this question could exist between the two species of property, we suppose it to be in favor of the purchaser of commercial paper; and so *43we think the reasons would strongly preponderate in favor of the negotiability of such paper.” So in the case of Guinn et als. v. Locke, 1 Head, 111, it was held that where land had been sold subject to the-equity of redemption, and the party entitled to redeem had been prevented from redeeming by fraud and artifice of the purchaser, and this purchaser had conveyed the land to a third party in payment of a pre-existing debt, such purchaser was held bound by the equity because he was not “ an innocent purchaser, but took the conveyance for a pre-existent debt.”
These principles have long been known as the settled law of this State. Now to their application in this case. A creditor cannot take a conveyance of the title for pre-existent debt directly to himself, and get the land free from any equities that may exist against it. Yet he may, under the view maintained in the case under consideration, have the land conveyed to a trustee or third party, in order that it may be sold to pay his debt in the future, hold it freed from the equity and override the highest of all equities against it, the payment of the purchase money by the purchaser. In the one case the land is conveyed directly to him and he gives up his note against the debtor and assumes it paid, yet takes the land subject to the equity, because he parts with nothing;, while in the other he still retains his note, has all his remedies on it, and yet by simple assent, either actual or implied, secures the payment of his debt by sale of the land, and may become the purchaser himself at that, thus by indirection securing what he could *44not do directly. In other words, an unexecuted and incomplete appropriation of the land, a matter of contract in fieri as yet, is made stronger and more effective than a completed conveyance made directly to himself in payment and satisfaction of the debt. How these things can be, consistently, is what I am unable to see.
We might add, the difficulty is so well settled, that if a party purchase and . pays his money with notice •of the equity of the vendor, he takes subject to itj yet here he gets clear of it, by paying nothing, only by giving his assent to the wrong, either express or implied, regardless of notice. I am unable to assent to this view of the law.
We think the whole case on the other side, rests -on the proposition, that it is based on a nearer analogy to our registration laws in their spirit, than the view we have taken. That it is not within them, is •settled by all the decisions of our courts; in fact, as we have said, if embraced by their lien, we would •only have to look to the question of registration, and the priorities shown by this would be conclusive.
As to the vendor’s lien being but an equity, so in fact is the beneficiary’s rights under a deed of trust. He must go into a court of equity to enforce it as a trust for his benefit. The vendor’s equity is prior in time, and I think stronger in right and justice.
We therefore conclude that the lien is a specific one fixed on the land, by the contract of sale; that the assignee in trust and beneficiaries are but volunteers, and as such stand in the shoes of the assignor j *45that they must necessarily take subject to the lien, - and can acquire by the voluntary assignment no higher-rights in the land than the assignor had, but take it ■with all charges fixed on it at the time; that the case is not within the registry laws, nor are the parties protected as innocent purchasers.
Therefore, the trust not having been executed or sale made before the filing of the bill, the vendor’s-lien must prevail over the claim under the deed of trust.