Court Opinion

ID: 3541580
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:53:03.755957+00
Date Added: 2024-06-11T09:36:05.150791
License: Public Domain

I dissent. The vital question involved in the controversy is whether Smith had notice of the extension agreement between the mortgagor and the mortgagee when the mortgagor conveyed the land involved to Smith.
Section 6938, Revised Codes, provides: "An unrecorded instrument is valid as between the parties and those who have notice thereof." Section 8780 provides: "Notice is: 1. Actual — which consists in express information of a fact. 2. Constructive — which is imputed by law." Section 8781 provides: "Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact has constructive notice of the fact itself, in all cases in which, by prosecuting such inquiry, he might have learned such facts."
The majority rule referred to in the majority opinion, as given in Phoenix Title  Trust Co. v. Old Dominion Co.,31 Ariz. 324, 253 P. 435, 59 A.L.R. 625, 632, is to the effect that priority in recording of a quitclaim deed is not alone sufficient to defeat a subsequent bona fide conveyance or encumbrance, but the quitclaim deed must, in addition to prior recordation, have been taken in good faith for a valuable consideration, and without notice. There is, therefore, a difference of opinion as to what one obtains by a quitclaim deed, but there is no division of opinion that the conveyance by a quitclaim deed must be taken in good faith, for value, and without notice, in order to defeat a prior unrecorded lien or mortgage or an extension agreement such as is here involved.
One who takes by quitclaim deed assumes all the risk relative to prior encumbrances or prior conveyances. He has nothing to show for his title but the quitclaim deed, and no recourse as to any other person or persons for any defects in the title conveyed. Any person of common sense and ordinary prudence surely takes such conveyance with full knowledge that he assumes *Page 381 
all the risks and all the defects that exist in the title of his grantor.
The general rule is given in 27 R.C.L. 731, section 497. One may not depend upon the records alone if facts have come to him that would lead a prudent man to further inquiry. "The fact that a purchaser claims under a quitclaim deed may not preclude him from protection as a bona fide purchaser; it is a circumstance entitled to consideration in determining whether his purchase was in good faith or not." (Id., sec. 500, p. 735.)
In Yale Oil Corp. v. Sedlacek, 99 Mont. 411, 419,  43 P.2d 887, 890, we said: "Whatever is notice enough to excite attention and put the party on his guard and call for inquiry, is notice of everything to which such inquiry might have led. When a person has sufficient information to lead him to a fact, he shall be deemed conversant of it." One who has reason to believe there is a defect in his title should be held to have notice of that which prudent inquiry would reveal.
Upon the record as a whole, deficient as it is, it taxes credulity beyond the point of common sense to presume that Smith did not have notice that he was purchasing land by a conveyance which did not pass clear title.