Court Opinion

ID: 9339689
Source: CourtListenerOpinion
Date Created: 2022-12-16 19:24:13.763401+00
Date Added: 2024-06-11T17:15:20.733790
License: Public Domain

The Chancellor.
To understand and properly dispose of the several questions raised in this case, it is necessary that I should advert to the leading facts, which serve to develope its character.
The complainant is the assignee of several promissory notes given by the defendants, E. B. & S. F. Noble to Lewis Reno, for the purchase of some town lots in the City of Jackson. A deed of trust was given on the lots to secure the payment of the notes so made, which notes and deed of trust were afterwards transfer*332red by Reno, to the complainant, who now alleges that the trustee named in the deed refuses to execute it, and prays that the same may be carried into effect by a decree of this court. The answer of the Nobles admits the sale by Reno to them, and the execution of the notes and deed of trust referred to in the bill, but states by way of defence, that lot No. 8 included in said purchase, was levied-on and sold, by virtue of executions against said Reno of older date than their deed from him. That one Nathan Ewing bid off said lot at said sale, and agreed to let them have the benefit of his bid, upon condition that they refunded the amount of money paid by him. It appears that after the sheriff’s sale, and before he made title to any one, the Nobles sold the lot to the defendant Johnson, and procured the sheriff to make a deed direct to Johnson. Johnson states in his 'answer, that he had no actual knowledge about the existence of the deed of trust in favor of Reno, at the time when he became the purchaser of the lot from Noble, and insists that his title is clear and complete. The deposition of Demoss, shows that Ewing was the bar-keeper of the Nobles at the time of the sale made by him as sheriff of said town lot; that Ewing paid two or three hundred dollars and directed him to make a deed to the Nobles; that they paid the remainder of the money due on the executions, amounting to upwards of nine hundred dollars. The defence of Johnson seems to me to depend in part, upon the question whether the Nobles are to be regarded as the real purchasers under the sheriff’s sale, and if so, whether the effect of that purchase was to cut out the incumbrance which the complainant seeks to make available. I think it is sufficiently apparent that Ewing acted as the mere" agent of the Nobles in bidding at the sheriff’s sale; this is plainly inferrable as well from the facts referred to, as from the circumstance that nearly all the purchase money was paid directly by them to the sheriff, and that Ewing at no time claimed any title under his bid,'but directed the sheriff to make a deed direct to his employers. Indeed the Nobles distinctly, admit in their answer that they were compelled to raise and pay the amount of the execution against the lot. In this part of the answer there is a strongly implied, if not direct admission in support of the allegation of the bill that Ewing acted as a mere agent in bidding at the sheriff’s sale, and that his bid *333was paid with Noble’s money. From all these facts, it is difficult to resist the conclusion, that Ewing’s agency in the matter, was a mere contrivance by which the Nobles intended to become the real purchasers through a feigned purchase on the part of another, and then set up title through that channel against their immediate vendor by Avay of defeating the payment of the purchase money. This the law will not tolerate.
A purchaser in possession is not permitted, except under peculiar circumstances, to buy in an out standing incumbrance or title, and oppose it to the title of his vendor, under whom he entered.
A court of equity will re-imburse a purchaser in money advanced in the extinguishment of incumbrances, by way of perfecting his title, but will not permit him to array such incumbrance in hostility to the title of his vendor. 4 Munroe’s Rep. 297-8; 2 John. Ch. 33.
If then the transaction shows that the Nobles were the real purchasers at the sheriff’s sale, it is quite clear that they could only claim tq have the amount of money paid at such sale, abated from the purchase money due by them, under the deed of trust. No principle is better founded in equity, than that a purchaser who buys up or discharges an incumbrance can only claim against his vendor the amount actually paid, because that would be the measure of damages in an action upon the covenants in his deed. Sugden’s Vend. 1 pt. 642. But it is insisted, by the counsel for Johnson, that the fact that the deed under the sheriff’s sale was made direct to him, clothes him with all the rights of a purchaser at that sale, and that his title commences with the date of the judgment under which the lot was sold, which is older than that of the complainant’s deed of trust. And it is insisted that even if Johnson is to be regarded as a purchaser from, the Nobles, he is a purchaser without notice of the complainant’s deed of trust, and is entitled to protection against it. I propose to examine these points in the order in which they are made. The argument that Johnson is to be regarded as a purchaser at the sheriff’s sale, has, I conceive, no foundation in the facts of the case; the contrary is fully established by every feature of both the pleadings and proof. Johnson, himself, most distinctly admits in his answer that he purchased directly from the Nobles; he says he was not even at the *334sheriff’s sale, and did not commence a treaty for the purchase from Noble until some time thereafter; and he shows that although he received a deed from the sheriff, he also took the obligation of the Nobles to make him a title. Johnson was then in truth, and in fact, a purchaser from Noble, and the mere expedient of taking a deed from the sheriff, under the direction of Noble, did not change the true nature and character of the transaction, so as to destroy the prior equity of third persons against his vendor. A Court of Equity looks to the substance of things, and will not permit the ends of justice to be defeated by any formal contrivance of the parties. There is much reason to believe that this expedient was devised in anticipation of the present controversy. The fact is clear that at the time of the purchase by Johnson, the title to the lot was beneficially and substantially in the Nobles ; the interest which they acquired by their purchase at sheriff’s sale enured to the title they obtained from Reno, under which latter title they could alone claim as against Reno or his assignees.
Johnson, then, having purchased from the Nobles, stands in their situation with reference to the deed of trust, unless he is protected, as a bona fide purchaser without notice of that deed; and this brings me to his second ground of defence. The deed of trust appears to have been recorded on the 11th day of November 1835; but it is insisted that this registration did not amount to notice because of the defects in the certificates of proof and acknowledgment. The certificates are not made under the seal of the certifying officer, nor is it stated by the witness who was called to prove the deed, that he saw the grantors sign the same, or that he saw the other witness sign in the presence of the grantor, or that they signed in the presence of each other. It is clear that these certificates fall far short of the requirements of the statute of the state upon that subject; the registration of the deed does not therefore, according to the authorities upon that subject, amount to constructive notice to subsequent purchasers. How. & Hutch. Dig. 345-6; 1 Sch. &. Lefroy 157. Heister v. Fortner, 2 Binney’s Rep. 40. James v. Morey, 2 Cow. 246-296.
These authorities hold that a deed unduly registered from the want of a valid acknowledgment, is not notice. It may be well doubted, however, whether upon a just application of well settled. *335principles to all the facts of this case, Johnson can assert any claim to the protection of the court as a 'purchaser without notice. Whether the deed of trust was fully and legally executed and recorded, so as to amount to constructive notice, or not, it at least created an equity in favor of the complainant, which he is entitled to enforce, unless notice of that equity is fully and positively denied. .
A purchaser who rests his defence in equity upon the fact of being a bona fide purchaser without notice, must deny notice fully, positively, and precisely, although notice be not charged on the other side, and must also deny all knowledge of the facts charged from which notice may be inferred. Gallatian v. Cunningham, 8 Cow. R. 361; Woodruff v. Cook, 2 Edw. Ch. R. 259; Hopkins’ Ch. R. 48.
Is Johnson’s answer a full, positive and precise denial of notice of the complainant’s equity? I think not. Referring to the allegations of the bill with reference to the sale by Reno to Noble, the notes given for the purchase money, the deed of trust made to secure the payment, and the assignment thereof to the complainant, he says of these matters he “never had any actual knowledge, or indeed any information other than that the said E. B. and S. F. Noble, or one of them, informed him about the time of the sale of said lot to the respondent that. they had purchased the same from said Reno; and about January,. 1837, he heard complainant speak of his claim: certain he is he never had earlier or more specific information on these matters, nor indeed, to the best of his memory and belief, any more detailed information until seeing a copy of said bill.” There is a degree of circumlocution about all this that leaves one in doubt as to what he intended to admit or deny. He has chosen to group a number of important facts, and then proceeds in general and indefinite language to answer them in the aggregate. Does he mean to affirm that he had no “actual knoyr-ledge” or “specific or detailed information” of these facts taken as a whole? or that he had no information of these facts taken separately? He may have had no precise knowledge of all the facts taken collectively, and yet be well advised of some one of those facts taken separately. The phrases,'“actual knowledge” and “detailed information,” are altogether too equivocal, and fall far short *336of that full, direct, and positive denial which a purchaser who claims protection against the equity of another on account of want of notice, is required to make. It is not necessary that he should have had actual knowledge of detailed information in order to charge him with notice. If he had such information as gave notice of the substance of the transaction, or as would have led him to actual knowledge or detailed information on the subject, it was quite sufficient. It is a well recognized principle, that whatever is sufficient to put a party upon inquiry, amounts in equity to notice. Johnson admits that he was informed at the time of the pinchase that Noble bought the same town lot from Reno. The deed from Reno to Noble recites that the purchase money was “secured to be paid.” Slight diligence on the part of Johnson would have informed him that the money was secured to be paid by the deed of trust, which the complainant now asks to enforce.
But whether his denial of notice of the complainant’s claim at the time of his purchase be sufficient or not, there are facts in the case which charge him with such notice before he had paid the purchase money. He admits that the complainant informed him of his claim as early as January, 1837; and it appears from the deposition and the exhibit thereto of Hall, that eleven thousand dollars of the purchase money was then owing, due, and unpaid— an amount greater than that which the complainant claims to enforce under his deed of trust. He also had notice as early as the 20th June, of the same year, by the service of the process in this case, at which time it seems the purchase money still remained unpaid. It was his duty to have paused at the first notice, and to have refused to go further with his contract; and if he afterwards made any payments, they were made in his own wrong.
Upon this ground, if no other, the defence of Johnson must fail. A purchaser, although he may have no notice at the time of his purchase, yet if he receives notice before he makes a payment of the purchase money, the land in his hands becomes bound from that time by the prior equitable lien, to the extent at least of the purchase money that then remained unpaid. Hence he who would protect himself,' as a purchaser without notice, must not only deny that he had notice, but it must also appear that he did not receive notice before payment of the purchase money. Wigg *337v. Wigg, 1 Atkins 384; Hardingham v. Nicholls, 3 Atkins 304; Tourville v. Nash, 3 Peere Wms. 307; Boswell v. Buchanan’s Executor, 3 Leigh’s Rep. 365.
From every view I have been able to take of the case, I think the complainant is entitled to the relief which he asks. I shall accordingly direct that the deed of trust be credited with the amount paid by the Nobles under the sheriff’s sale, and that a new trustee be appointed, with power and directions to sell the lot in question upon the terms pointed out in the deed. The complainant must pay the costs.