Court Opinion

ID: 6811397
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:54:29.903301+00
Date Added: 2024-06-11T16:03:40.033545
License: Public Domain

Keith, P.
(dissenting) :
Conceding that Mrs. Wasserman ivas not a complete purchaser clothed with the legal title, or with the right to call for it; that she acquired only an equity, I am of opinion, notwithstanding, that upon the facts of this case, for which Í refer to the opinion of Judge Cardwell, she is better entitled to consideration at the hands of a court of equity than Mrs. Metzger. In other words, that while neither one of them has more than an equitable interest in the subject of controversy, their equities *780are not equal, and it is only where equities are equal that priority of time becomes decisive as to priority of right.
In my view of the case, Mrs. Metzger has so acted as to require the court to postpone her right to that of Mrs. Wasserman. Mrs. Metzger held a lien by deed of trust of record. She so dealt with that lien that the record upon which Mrs. Wasserman had a right to rely showed that the deed had been executed and the lien created by it satisfied. It is conceded that -the Building Association, as a result of the action of Mrs. Metzger’s trustee, gets a legal title and is a purchaser for value and without notice; it is conceded that Mrs. Wasserman purchased the equity held by her in good faith and without actual notice of Mrs. Metzger’s rights. So far as the record goes, it not only gave her no notice of any adverse right, but, showing as it did the deed of trust securing Mrs. Metzger and its execution and satisfaction, it lulled her suspicions and was an assurance that she had nothing to fear from that quarter; and yet while these facts are held sufficient to transmit the legal title and a complete equity to the Building Association, the conclusion of the court leaves Mrs. Wasserman, who was equally deceived by the false appearances and equally innocent, to suffer the consequences and to be postponed in her rights to Mrs. Metzger, who could have protected herself and others-—to Mrs. Metzger, whose agent made the sale under conditions which on their face it is admitted authorized him to sell, and whose deed conferred upon Morris the legal title which he in turn conveyed to secure the loan to him from the Building Association.
In the face of the conduct of Mrs. Metzger, in the face of the acts of the trustee in the deed to secure her debt, who was her agent and not Mrs'. Wasserman’s, I cannot think that the equities existing between Mrs. Wasserman and Mrs. Metzger are equal.
*781In Hume v. Dixon, 37 Ohio St. 67, it is said: “When the equities are equal the rule of law is adopted that the oldest in point of time will prevail; hut it is a mistake to suppose that the age of an equity is of material significance when the equities are not otherwise equally meritorious. It is only where all things considered the conflicting equities are equally meritorious in quality that the element of time becomes material.”
In Rice v. Rice, 2 Drewry’s Rep. 76, 77, 78, it is said: “What is the rule of a court of equity for determining the preference as between persons having adverse equitable interests? The rule is sometimes expressed in this form: ‘As between persons having only equitable interests, qui prior est tempore potior est jure/ This is an incorrect statement of the rule; for that proposition is far from being' universally true. In fact not only is it not universally true as between persons having only equitable interests, but it is not universally true even where their equitable interests are precisely the same nature, and in that respect precisely equal; as in the common case of two successive assignments for valuable consideration of a reversionary interest in stock standing in the names of trustees, where the second assignee has given notice, and the first has omitted it.
“Another form of stating the rule is this: ‘As between persons having only equitable interests, if their equities are equal, qui prior est tempore portior est jure/ This form of stating the rule is not so obviously incorrect as the former. And yet even this enunciation of the rule (when accurately considered) seems to me to involve a contradiction. Dor when we talk of two persons equal or unequal equities, in what sense do we use the term ‘equity’ ? Dor example, when we say that A has a better.equity than B, what is meant by that ? It means only that, according to those principles of right and justice which a court of equity *782recognizes and acts upon, it will prefer A to B, and will interfere to enforce the rights of A as against B. And, therefore, it is impossible (strictly speaking) that two persons should have equal equities except in a case in which a court of equity would altogether refuse to lend its assistance to either party as against the other. If the court will interfere to enforce the right of one against the other on any ground whatever, say on the ground of priority of time, how can it be said that the equities of the two are equal; i. e., in other words, how can it be said that the one has no better right to call for the interference of a court of equity than the other? To lay down the rule, therefore, with perfect accuracy, I think it should be stated in some such form as this: 'As between persons having only equitable interests,' if their equities are in all other respects equal, priority of time gives the better equity; or, qui prior est tempore potior est jure”
Sugden on Vendors, ch. 19, sec. 32, approves the law as stated in Rice v. Rice, supra.
Cyc., Vol. 16, p. 139, states the rule to the same effect as follows: "Where conflicting equities are otherwise equal in merit that which first accrued will be given preference, but this test is the last resorted to and does not prevail when any other equitable ground for preference exists.” See, also, 1 Pom. Eq. (3d ed.), sec. 413.
■ But in addition to this, when the first note fell due and was paid to Mrs. Metzger, she should have cancelled, or in some way so marked, that obligation as to disable it from being restored to circulation and by passing into the hands of an innocent holder become a competitor with the second note of the series representing the deferred payment upon the property originally sold by her, and thus bringing about the situation which must result in loss either to her or to Mrs. Wasserman. It is true that *783Mrs. Metzger was the payee in the note, and that she never assigned it to any one, but it is also true that a note may be transferred without written assignment so as to pass an equitable right to the transferee (Bell v. Moon, 79 Va. 351), and by surrendering the note which was the evidence of .the debt and had been paid to her by the maker with nothing upon it to indicate that it had been satisfied, she enabled Wasserman to transfer it by delivery to Morris, and thus became responsible, however innocently, for the first link in the chain of circumstances ending in this controversy. The note was in her possession; the money which it represented was paid to her; it was wholly within her power to have prevented the catastrophe; and as her conduct is responsible for the conditions which have arisen, I think that her equity should be subordinated, though prior in point of time to that of Mrs. Wasserman, who is wholly innocent and without fault in the transaction.
As showing a better equity in Mrs. Wasserman than that claimed by Mrs. Metzger, I rely then first upon the fact that it was the trustee in the deed to secure Mrs. Metzger, who made the sale under circumstances which the court holds were sufficient to transfer the legal title without carrying notice of any infirmity in the transaction to those who purchased at that sale, and that as a result of the act of the trustee the Building Association is a complete purchaser for value without notice and holds the legal title for its protection; that as a result of the conduct of the trustee Mrs. Wasserman acquired an equity, not only without any notice of prior eqxiities, but was lulled to sleep by the act of the trustee who executed the,, trust and thus satisfied the lien created by it, and from that moment the record gave assurance to Mrs. Wasserman and all the world that there was nothing further to fear from the lien of that deed of trust.
blow the trustee in that deed was the agent, not of Mrs. Was*784serman, but of the grantor and beneficiary in that deed. A trustee in a deed of trust is the agent of both parties; that is, of the grantor and the beneficiary in the trust, said this court in Rossett v. Fisher, 13 Gratt. at page 498. If any one is to suffer, therefore, by his acts performed in good faith, but the effect of which has been to impose a loss upon one of two innocent persons, each of them holding an equity, surely it should fall upon her whose agent he was and not upon one a stranger to that transaction.
In the second place, I rely upon the fact'that Mrs. Metzger surrendered a note, which.had been paid and satisfied to her by the maker, constituting one of a series secured by deed of trust, into the possession of the maker without any mark upon it by which she could easily have rendered it impossible for anyone to assert or to transfer any right under it and bring it into competition with the second note representing the deferred payment upon the land originally sold by Mrs. Metzger.
Hor these reasons, I am of opinion that the equities between Mrs. Metzger and Mrs. Wasserman are not equal, and that Mrs. Wasserman holds the better equity, though junior in point of time to that of Mrs. Metzger.

Affirmed.