Court Opinion

ID: 6672875
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:13:46.333992+00
Date Added: 2024-06-11T16:00:36.249645
License: Public Domain

The opinion of the Court was delivered by
Moses, C. J.
The equity of the plaintiff, as presented by the brief, is certainly of a high character, and it was due to his zealous counsel, who pressed their conviction of the right of their case in an able and learned argument, that we should not only give it a full consideration, but examine with care the various views by which a reversal of the Circuit decree was sought.
If it were within our power to administer what we might regard as justice, measured alone by our individual conception of it, we most probably would conclude that the plaintiff was entitled to all that he claimed by his bill. But it is not within our province to substitute our own notions of abstract right, in the place of the well established rules which have been prescribed for our adoption by the wisdom of the law, fortified, as they have been for ages, by their acceptance as the proper standard for the regulation and control of property, and sanctioned by the experience and wisdom of the judicial luminaries who have been called on to enforce them.
Impotent and vain, too, would be the endeavor to prevent injustice, by limiting or modifying the application of legal principles by *527our own considerations of equity, regardless of the well defined and accepted rules decreed by “ the great masters ” who have built up a science with principles now almost as' well defined and ascertained as those of the common law itself.
The decree determines the question of fraud in favor of the defendant, R. C. Shiver, and we see nothing in the evidence which shews that he had any notice of the circumstances attending the execution of the title by the plaintiff to his father, William Shiver. The deception which he practiced on the plaintiff cannot affect the judgment, if R. C. Shiver occupied the position of a subsequent creditor without notice, for there was no duty or obligation which could place him in the relation of a trustee.
It becomes, therefore, necessary to enquire whether the said R. C. Shiver stood as an antecedent or a subsequent creditor of the said Wm. Shiver, on the 19th July, 1866. Assuming that, as to the §1,500, he was an antecedent creditor, there would yet remain of the judgment §3,919, besides interest, an amount exceeding the price at which the premises were sold. This arose from the indebtedness of the father to the son, on account of the transaction with the banks, and the character of this claim we will therefore alone consider. It does not appear from the brief on what cause of action the confession of judgment was founded. We are prevented from supposing that it was on the notes of Wm. Shiver transferred by the bank to R. C. Shiver, which might raise a question of some interest as to the position in which he could be regarded in respect to them, for the bill alleges that “ he paid the debt of his father in bank notes at par, for which he had paid not more than twenty-five cents on the dollar,” and prays, among other things, that if the confession cannot be vacated for fraud, “ it may be reduced to the amount actually paid for the notes of William Shiver.” If he satisfied these notes at the request of his father, which does not appear to be controverted, the liability of the father to him arose at the time of the payment, and from that period alone was he a creditor. A confusion has arisen as to his relation, by viewing him at times as the purchaser of the debts from the bank, which is at variance with the testimony.
It was competent for William Shiver to contract with his son for the payment to him of the full amount due on the notes, if he would pay and satisfy them. Holding, therefore, that as to this portion of the debt, he occupied the position of a subsequent creditor, and that the debt is to be estimated at the sum recognized by both of them, *528the only further enquiry is, whether the agreement of William Shiver with the plaintiff, Boyce, amounted to an equitable mortgage, and if so, whether it can prevail against the said R. C. Shiver, as such a creditor without notice?
The doctrine of lien, by equitable mortgage, either arising from imperfect attempts to mortgage, or to devote specific property to the payment of a particular debt, or established “as implied from the agreement of the parties, or the justice of the case,” or even created by the deposit of title deeds, has long prevailed in England, and has been recognized by our Courts. The principle is not confined to the lien by mortgage only, but extends even to agreements for sale of real estate, and permits the equitable interest thus raised to prevail against a subsequent creditor, though holding by a general lien. In fact, in the case of the Bank vs. Campbell, 2 Rich. Eq., 191, effect was given to the equitable interest against the legal title of a purchaser deriving it from a sale under a subsequent lien. To what extent this Court might be willing to adopt the principle there announced, it is not necessary now to determine, for the plaintiff’s counsel here, so far from insisting on the doctrine therein declared, concedes “ that by general principles, and without reference to recording acts, no equity can stand against a bona fide purchaser for valuable consideration, without notice.” R. C. Shiver, however, does not occupy that position, for he purchased while the cause was pending, and can therefore be regarded only as claiming as a subsequent creditor, without notice, and must stand or fall by the consequences which follow that relation. The plaintiff, according to the rule maintained, both by the Courts in England and this State, is entitled to the relief which he seeks, unless estopped by the provisions of the Act of 1843, 11 Stat., 256.
It is contended for the plaintiff that equitable mortgages are not within the recording Acts. This is true so far as they are recognized as creating rights in themselves, binding all who Were parties to their creation, and, so far as they do Dot come within the letter or spirit of any legislative prohibition, which refuses to give effect to a perfect, legal mortgage, unless recorded as by law provided and required. Before the Act of 1843, a written mortgage, complete in form, but not recorded, was preferred to a subsequent creditor without notice. A mortgage, conferring only an equitable right, frequently incapable in itself of being recorded, was good, too, against such subsequent creditor, but neither could take precedence of a subsequent purchaser for valuable consideration without notice. *529The plain and manifest object of the Act was to destroy the distinction in the position of the subsequent creditor and purchaser, and to place them both on the same footing. While this is not denied as to those claiming under mortgages in legal form, it is insisted that the Statute works no change in the mortgage which, by the very nature of it, cannot be recorded. To say that the validity which the Legislature withholds from a legal mortgage, for want of recording, shall be given to an equitable mortgage, which may be known only to the parties interested in it, and then often relying on human testimony for its purposes and intention, would be to charge the lawmaking power with an inconsistency too gross and violent to be entertained for a moment.
The wisdom and policy which dictated the Act, to suppress the mischief it was intended to subdue, must be extended to all contracts and agreements through which an equitable lien by way of mortgage can be asserted. The consequence of imparting validity to unrecorded mortgages wrought most injurious consequences, by depreciating the value of real estate, which to some extent depended on the facility of the means of ascertaining its title.
In a country where land is often changing hands, freed from, and unfettered by the laws which confine it to hereditary succession and descent, the admitted policy is to afford a ready mode of discovering all changes in the title, or incumbrances upon it. This is not only impaired, but prevented by giving effect to secret conveyances, which are seldom brought into notice until some innocent party is to be injured by their introduction. The proposition of the plaintiff seeks to place an equitable mortgage upon a better footing than a duly executed mortgage. It is admitted that if the plaintiff had a complete mortgage of the land, it could not prevail against the defendant, R. C. Shiver, for want of recording; why ? because he had no notice of it; and yet it is claimed at the same time, that his unwritten equitable mortgage,* growing out of the transaction between him and William Shiver, is to operate to the prejudice of R. C. Shiver, who, in ignorance of it, became his creditor. It would seem that the proposition, by its mere statement, refutes itself.
Grimestone vs. Carter, 3 Paige, 437, referred to as an authority, proceeded upon the ground that the purchaser had notice of the possession which was sufficient to put him on enquiry. It was a priority sought against a subsequent purchaser without notice, which it is admitted in the argument, for the motion before us cannot prevail in this State. So far as the case is to have any force as estab*530lishing an equitable claim, it will be remembered that the Chancellor (p. 439) remarks that such claims are “ expressly excepted from the provisions of the Statute (1 R. S., 762, § 38,) requiring conveyances to be recorded.” So far from any disposition to extend the provisions now existing by law, in favor of secret liens, we feel that the highest considerations of public policy require that they should be held within their prescribed bounds. There is not a single modern writer, whose opinion carries weight, who does not regret that the Courts ever favored the introduction of secret liens on property, and many of the most eminent Judges of England, while they felt bound from precedent and authority to sustain them, denied the wisdom and policy of the rule which permitted them, and but few Judges in our country, whilst also following the authority of names which preceded their own, have failed to , declare their determination not to extend them beyond the limits to which they have been carried.
We live in a day of enterprise and commerce, and no lien on property of any character should avail unless an opportunity is afforded to the public to be informed of-it.
It is asked “if it was the intention of the Act of 1843 to cut up by the roots the whole doctrine of constructive trusts, as administered by this Court ?” While we answer that such may not have been its purpose, we at the same time hold that effect cannot be given, as against a subsequent creditor without notice, to an agreement or transaction through which an equitable lien is asserted and claimed.
The case is a hard one on the plaintiff, who, in his dealing with William Shiver, has exhibited a generous and liberal, though a misplaced confidence, but we cannot deprive the son of his right because the father has violated his trust to the plaintiff, who possessed him with the legal title, and thus permitted him to gain credit on the faith of it.
We do not think, however, that it is a case for costs against the plaintiff
It is ordered that the motion be dismissed — William Shiver to pay all the costs, and in case of his inability to do so, each party to pay his own.
Willard, A. J., and Wriglü, A. J., concurred.