Court Opinion

ID: 8012293
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:59:37.482537+00
Date Added: 2024-06-11T16:36:08.410602
License: Public Domain

W. M. Williams, Special Judge.
This is a suit in equity, in which plaintiff seeks to subject a tract of land, now belonging to defendant Nichols, to the payment of a note executed by defendant Roy' to his codefendant Baker, and by the latter sold and delivered to the plaintiff Barrett.
Roy, on May 5, 1882, made his note for $3,500, due one year after date, payable to the order of defendant Baker, and executed a deed of trust to secure the same, upon the land in controversy, which was then the property of Baker, the payee in the note. This deed of trust was filed for record on the seventeenth of May, 1882.
Baker, after indorsing a credit of $1,000 on the note, sold it to plaintiff Barrett, a citizen of New York, for $2,500. Baker kept the interest paid until May, 1889, and Barrett held the note for about six years, without making any examination or inquiry, so far as this record shows, in reference to his security.
It is alleged in the petition, and conceded by the parties, that Roy never had any title to, or interest in the land, either legal or equitable.
The defendant Baker, about the fourteenth of December, 1888, more than six years after the making *517of the deed of trust, through his agent, James W. Daniels, an attorney and real estate agent, contracted to sell this land to defendant Nichols for $3,200. It does not appear that Nichols had any dealing concerning the land with Baker personally, but the entire transaction was with Daniels. All that Nichols learned about the title, so far as any intimation in the evidence shows, was from him.
An abstract was presented and Nichols requested Daniels to examine it. The Eoy deed of trust was noted upon the abstract. Daniels informed Nichols of this, and told him that Baker’s title was imperfect, as he expressed it, upon that account. The abstract was returned in a few days to Daniels, with a notation thereon, showing that Baker, after the former examination, had entered satisfaction of the deed of trust. This written statement upon the margin of the record was signed by Baker and attested by the recorder, and declared that Baker was the legal holder of the note and that he acknowledged payment in full thereof and satisfaction of the deed of trust. Daniels reported this to Nichols and that Baker’s title was then perfect. Nichols thereupon concluded the purchase and accepted the deed.
The record also shows that there was other land in the deed of trust besides that conveyed to Nichols; that Baker sold this also, and that a similar abstract was examined by another attorney and Baker’s title pronounced good, and thereby he was enabled to sell said other tract also.
The real question presented, as shown by the above statement, is, whether Nichols, at the time of Ais purchase, had notice of Barrett’s equity, for it must be conceded that, although the deed of trust executed by Eoy, a stranger to the title, did not of itself .constitute a valid mortgage, yet the sale of. the *518note purporting to be secured by a lien upon the land operated as an estoppel upon Baker to deny the validity of said deed of trust, and, as against Baker, and purchasers from him with notice, Barrett was clearly entitled to a lien upon said real estate for the amount due upon the note.
It is unimportant in this ease to determine-whether the record was constructive notice to Nichols of the existence of the deed of trust. He had actual notice thereof. It was noted upon the abstract, and his attention was specifically called to it. He must therefore be held to have had knowledge of its contents, and notice of every fact about which inquiry would have been suggested to an ordinarily prudent man from the provisions of the deed, and which could have been ascertained by reasonable examination and inquiry. It is settled law that “one will be charged with notice of a fact who has information which should put him upon, inquiry, if, by following up such information, with diligence and understanding, the truth could have been ascertained.” Jennings v. Todd, 118 Mo. 303. It is also true that “a purchaser is not required to use the utmost circumspection. He is. bound to act as an ordinarily prudent and careful man would do under the circumstances.” Kirsch v. Tozier, 38 N. E. Rep. 375. Ordinary prudence and diligence is all that is required. Cambridge Valley Bank v. Delano, 48 N. Y. 326.
Nichols knew of the deed of trust, and this is the-only notice that he had. There seems to be no dispute in the evidence, that he had this notice, and further, that he had no other or greater notice than would be-suggested by an examination of this instrument. Was-this sufficient to charge him as a purchaser mala fide ¶
The instrument executed by Roy did not of itself' constitute a valid lien upon Baker’s land. The deed. *519of trust, while the note, was held by Baker, could not operate as an incumbrance in his favor, upon real estate to which he had the absolute title. He could not well hold a lien upon his own land. The plaintiff’s equity to enforce a lien upon the land arises out of his transaction with Baker, subsequent to the execution of the trust deed. It is of this that Nichols must have had notice at the time of his purchase, and he must have drawn the inference of the existence of plaintiff’s rights, if at all, from what was suggested by the deed of trust. What notice did the deed of trust give of this equitable lien ?
It could not have been inferred from the existence of the deed of trust that Roy held an unrecorded deed to the land, or had some interest therein, which did not appear of record. The pleadings and evidence negative any such interest on Roy’s part. Nichols should not be held to have had notice of that, which did not exist, and which no inquiry could have discovered.
It is urged, however, that there was sufficient in the deed of trust to put him upon inquiry as to the transfer of the note; that he must have known that the deed of trust was procured by Baker for some purpose; that Baker would not be guilty of the idle act of clouding his title by an apparent incumbrance without any purpose in view; that it was reasonable to presume, and Nichols should have presumed, that Baker procured the execution of the deed of trust in order to raise money upon the note. This, however, assumes that Nichols had notice that Baker procured Roy to make the deed of trust, — the very point in controversy. It is argued by counsel for Nichols that it was quite reasonable for one seeing the abstract to conclude that the land in this deed of trust was misdescribed and Baker’s land inserted by mistake instead of Roy’s, It may be said in favor of this contention that common experi*520ence attests the fact that mistakes of this character are of frequent occurrence.
In order, however, to charge Nichols with notice of plaintiff’s rights, it must be held that the deed of trust itself would have suggested to a reasonably careful person, the unusual and extraordinary transaction that occurred between Baker and Roy, and Baker and Barrett; and that one reading this instrument would have had sufficient notice therefrom to put him upon inquiry, as to the uncommon dealings between these parties. It certainly is not customary for a landowner, desiring to raise money upon his land, to procure the execution of a note and a deed of trust upon the land by a stranger to the title, in order that the owner may negotiate such note. This is not the usual method of borrowing money upon real estate. It is not strange, therefore, that it did not occur to Nichols, or to the lawyers who examined this title, that such a course had been adopted.
It is likewise out of the ordinary course of dealing for one who loans money upon real estate to accept a note, purporting to be so secured, and to hold the same for six years, without ascertaining that the grantor in the deed had at least some semblance of title, or claim to the land mortgaged. It is not unreasonable that an ordinarily careful man, seeing the abstract, and knowing that Roy had no title, should not have presumed, or had it suggested to his mind, that a third party had bought the note, and loaned $3,500 upon the faith of Roy’s deed of trust. Such conduct is so unusual, unnatural, and unbusiness like, that a party should not be regarded as negligent, or inattentive to inquiries suggested by the deed of trust, because it did not suggest itself to him that Baker might have obtained money by negotiating this note, and thereby have' *521estopped himself from denying the validity of the deed of trust.
It further appears that the note was five years past due when Nichols bought. Baker’s written declaration upon the record that he was the owner and holder of the note, and that'the same was satisfied in full, which was equivalent to a statement that it had never been negotiated, was brought to the attention of Nichols. All the circumstances known to Nichols, or suggested by any fact of which he had notice, indicated the truthfulness of this statement, and we can not think that, under the facts developed in this case, Nichols should be held to have had notice of Barrett’s equitable lien upon the land, as against Baker.
The point is now made, for the first time, that the answer is insufficient to raise the issue that Nichols was an innocent purchaser. The case of Holdsworth v. Shannon, 113 Mo. 508, is cited in support of this contention. The objection, however, comes too late. The case was tried in the lower court upon the theory that the pleadings were sufficient to present this question. No objection was made to the answer upon the trial or in the printed briefs filed in this court. It can not be considered now. This was expressly so ruled in Kinzer v. Kinzer, 130 Mo. 126, in reference to asimilar objection, made for the first time in the supreme court.
It follows from what has been said that the judgment should be reversed and the cause remanded, with directions to the circuit court to enter judgment in favor of defendant Nichols.
Brace, C. J., and Gantt and Burgess, JJ., concur. Barclay, Sherwood, and Robinson, JJ., dissent.