Court Opinion

ID: 6576503
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:34:48.24696+00
Date Added: 2024-06-11T15:57:07.210466
License: Public Domain

Poland,' J.,
dissenting. This case was argued at the stated term, in Franklin County, before the Chief Justice, Judges Bennett, Pierpoint, and myself, and all except me were of opinion that the decree of the chancellor should be affirmed. The question involved was considered one of so much practical consequence, that it was deemed advisable to have the case lie to the general term for further examination and consultation with the other members of the court. In the mean time, the opinion of the majority of the judges who heard the case was drawn up by the Chief Justice, as now delivered, but an examination of the same, and the consideration' I have been able to give the case since the argument, have both failed to convince me of the correctness of the chancellor’s decree, so far as the same allows the orator to recover for any advances made by him to Darrow after the execution of his mortgage. Since the argument, however, I have not had access to the papers furnished to the court in the case, until this term, and therefore have had no opportunity to draw up the reasons of my dissent in form. They must, therefore, be stated in a very general and brief manner.
My great objection to the doctrine of this decision is, that it is, in my opinion, another step in advance in frittering away and destroying the benefits and advantages of our system of registry. The great object of that system is, that there shall be a public record open to the inspection of all, where every person can ascertain by inspection and reasonable diligence the state of the title of all real property, and whether the same is subject to- incum*138brances, and if so, tlieir extent; a place where purchasers can acquire reliable information, and where creditors may ascertain the condition of their debtor’s real property without endangering him, or themselves, by setting on foot inquiries and speculations as to the state of his affairs.
When this system was first adopted, it was made a serious question whether actual notice of a prior unrecorded conveyance would defeat the title of a subsequent purchaser or attaching creditor, but it was finally held, and no doubt correctly, that such notice, m fad, answered the object of a record, and that any after title obtained with knowledge of it, was a fraud upon the first purchaser. Since then, various decisions have been made, which by slow but insidious steps have been gradually undermining the whole substantial advantage of the system. This has generally been done by sustaining mortgages or incumbrances where the real nature and extent of them did not appear upon the record. This evil has been felt to such an extent that in several of the States they have interfered by statute, and swept away all these various exceptions and judicial interpolations, and made fraudulent and void all incumbrances, which do not disclose upon their face their true character and extent. I anticipate the same course of legislation in this State.
The subsequent claims of the orator were allowed under this condition in his mortgage ; that said Darrow shall pay or cause to be paid, “ all the notes and agreements I now owe or have with him, or I and others jointly and severally have with him.”
In my judgment, these words do not, in terms, or by any just inference or interpretation, point to any future indebtedness or liability that should arise or accrue thereafter, but only to liabilities which then existed in some form or other, and that no man of mere common sense and reason would suspect from the mere inspection of the record, that the mortgage was intended to cover future advances, and that therefore the record of such mortgage would not, in any legal or equitable sense, put him on inquiry to ascertain whether such advances had been made, or their extent.
This mortgage was made in February, 1851. The subsequent mortgage to the defendant Brainerd was not given till January, 1854.
*139All the evidence in the case shows that Darrow was an active, stirring, trafficking, business man, and Brainerd might reasonably suppose that whatever indebtedness, or notes, or agreements the orator held at the date of his mortgage, had been paid and can-celled at the time he took his mortgage, and that he incurred very little risk from any debts of that early date.
It is not claimed that this part of the mortgage condition did or could afford the slightest information of what was intended to be secured by it, but it is said that because it did not, and from its very uncertainty and vagueness, it put Brainerd and all others who might have an interest in ascertaining the extent of the incumbrance, upon inquiry. Conceding this to be so, and that Brainerd was thus put upon inquiry, what ivas his duty, and to what extent was he affected ? As I understand the law on this subject, when a man has no certain knowledge of a fact, but is only put on inquiry, he is held to have notice of all such facts as reasonable diligence in prosecuting his inquiry in the proper direction would bring to his knowledge. What was Brainerd bound to do ? what did he do ? and what did he learn ? Brainerd had a large debt against Darrow, and desired to get security. Darrow was evidently on the eve of failure, or rather had failed, and what was to be done must be done quickly, The persons most likely to know what was meant by this condition, and how much, if anything, was due under it, were the orator and Darrow. The orator was absent in a distant State, and it is not claimed that he should or could have been consulted, Brainerd did apply to Darrow, and was informed by him that there was nothing due, that the orator was fully paid, and Darrow repeated this many times after the records had been examined, and after being apparently pressed in the strongest manner both by Brainerd and Hoyt. The only other source of information that appeared to be open at all, was to make inquiry of the orator’s father, and this was made by Mr, Hoyt, at the request of Brainerd, and no question is made but that Hoyt was a perfectly competent man for that purpose, and learned all the facts that could be learned in that quarter. The result of Hoyt’s examination was, that he discovered no trace whatever among the orator’s papers of this conditional note, or *140the debts allowed to the orator under it, and this information was communicated to Brainerd while Darrow was still there and while there was some opportunity, at least, for Brainerd to have obtained further security from him, at least by arresting his body, and it appears he absconded the same night, carrying away a. considerable sum of money.
Now it is clear to my mind that Brainerd used all possible diligence to ascertain the state of Darrow’s indebtedness to the orator under this mortgage, and did not discover the slightest trace of any debt which the orator claims to recover, which accrued subsequent to the date of his mortgage. With what propriety then can it be said, that he is to be held affected with any knowledge of what the record itself did not disclose ? It is said that if the orator had been at home,, and had been inquired of, he could have given him full information, and that the orator was not bound to remain at home to. give it, or refrain from taking long and distant journeys. All this is very true, but a most satisfactory answer to all this is, that it was his duty to have his mortgage so describe his debt that other persons could learn by the record the state of his incumbrance, and thus run as little risk by his absence from home as he did himself.
It is hardly possible to suppose a case which will better illustrate the advantages and safety of a rigid adherence to the integrity of our recording system, and the dangers and insecurities of departing from it, than the present case. But it seems to me that this condition of this mortgage is invalid to entitle the orator to hold under it for any future advances. The cases on this subject seem to require, to make it available for any such purpose, that the mortgage should clearly express on its face that it is given to secure future advances, or if a bond or note be given which is to be a security for future advances, tlie mortgage must describe that, and the advances not exceed it. I think no case can be found where one or the other of these has not been required. Where a mortgage is given expressly to secure future advances, or as an indemnity, express notice is thereby given to all the world that they must inquire; and when a mortgage is given for a specific sum which is intended as a security for future *141advances, the record always shows on its face an absolute incumbrance, for at least as much as it is in fact, and nobody can be deceived by the record.
The condition of the orator’s mortgage was invalid under these decisions, for it complied with neither requirement; it described no debt and no sum, and did not point to future advances.
Neither of the cases cited, decided in this State, conflict at all with this view. In Gibson v. Seymour, where it was held that an absolute deed given to secure a debt, and for future advances, was void as a mortgage, the record showed the whole title to be in the mortgagee, and no title at all left in the mortgagor, so that-no one, from the record, could be deceived by supposing he had. a greater interest or title than he had in fact.
So in McDaniels v. Colvin, the court held that the language of the condition expressly pointed to future advances or indebtedness, so as to come entirely within the cases in other States. I think previous decisions in this State and other States have gone to a dangerous extent, but I regard this decision as an advance upon them all, and in the wrong direction.
There does not seem in the present case to have been the slightest necessity for the orator to have his mortgage in this deceptive form. His conditional note existed long prior to the execution of his mortgage, the mortgage was executed under no circumstances of haste, but was made as it was, deliberately, and I have no doubt done so purposely, so as not to have it show on its face the true indebtedness of Darrow to the orator, and for the purpose of giving a false appearance of credit to Darrow to deceive his creditors, and persons of whom he desired to obtain credit, and its designed and legitimate purpose and end has been accomplished. In my opinion it should be held fraudulent and void. Agreeably to the purpose for which the case was held to the general term, the papers and briefs have been examined by Judge Barrett, who fully concurs, I am authorized to say, in the views I have expressed. Judge Aldis having been of counsel for the defendants, is disqualified to sit in the case. I regret that the case should be thus decided by a less number than a majority of the whole court, but it seems a necessary result, being the opinion of a majority who can act in the case.