Court Opinion

ID: 9616493
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:47:21.670509+00
Date Added: 2024-06-11T09:56:51.962893
License: Public Domain

Hall, Justice.
This appeal presents a contest between, on one side, a homeowner who allowed record title to her residential property to stand in the name of her son-in-law because *321his income or credit rating was thought necessary to satisfy the mortgage lender at the time of purchase, and, on the other side, an attorney who loaned money to the son-in-law on the strength of his record title taking a security deed to the property, and the assignee of the attorney to whom he sold the son-in-law’s note and security deed, all of which was done without homeowner’s knowledge. The son-in-law defaulted on payments, and the assignee threatened foreclosure. The homeowner then brought suit asking that the court decree that the property held by the son-in-law was impressed with a resulting trust in her favor, and that the security deed was null and void.
At trial the homeowner presented evidence which was more than adequate to show that she was the true beneficial owner of the property; that at all times pertinent hereto she had been in open and exclusive possession of it under a claim of title; that the son-in-law did not live on the property with her; that the attorney, prior to making the loan to the son-in-law, visited the property and ascertained that she was the mother-in-law of Mr. Harris, her son-in-law, but that he said nothing to suggest to her that the son-in-law was encumbering the property; that he never asked her under what claim she held the property; and that the assignee similarly never inquired of her. It appeared that the son-in-law had represented to the attorney that the homeowner rented the property from him. The evidence showed without conflict that the homeowner was unaware of her son-in-law’s attempt to encumber the land until after the security deed was given to Siegel and transferred to Zimmerman. At the close of her case, the court directed that a verdict be entered as prayed for against the son-in-law; and that a verdict be entered for the attorney Siegel and the assignee Zimmerman (hereinafter, "the defendants”) to the effect that the security deed was a valid encumbrance on the property. The only appeal is by the homeowner from the directed verdict for defendants. We agree with her contentions and reverse.
Homeowner’s argument here, based on Code § 85-408, is that although record title stands in another’s name her open, exclusive possession of the property is *322notice to all the world of whatever her right or title may be, and that Siegel and Zimmerman had a duty to inquire of her concerning her right, and as a consequence of their failure to do so they may not now prevail. This argument is based upon very old principles of law set forth in, for example, Broadwell v. Maxwell, 30 Ga. App. 738, 747 (119 SE 344), in which property was impressed with a parol trust: "The plaintiff Maxwell, who claims to have purchased the property from Smith [trustee], and who is seeking to dispossess the tenant [beneficiary], is not a bona fide purchaser for value without notice of whatever equitable title the defendant [tenant-beneficiary] had in the property. 'Possession of land is notice of whatever right or title the occupant has.’ Civil Code (1910), § 4528. 'He who takes with notice of an equity takes subject to that equity.’ Civil Code (1910), § 4529. 'Notice sufficient to excite attention and put a party on inquiry is notice of everything to which it is afterwards found such inquiry might have led. Ignorance of a fact, due to negligence, is equivalent to knowledge, in fixing the rights of the parties.’ Civil Code (1910), § 4530. A purchaser therefore is put on notice of all the right, title, and interest of a tenant in possession. The rule is not different where the tenant in possession is a cestui que trust. Actual possession by the cestui que trust is constructive notice to a purchaser as to the occupant’s equitable title. [Cits.]” (Emphasis supplied.)
The superior court ruled that the son-in-law held the land as trustee under a resulting trust for her benefit. This ruling has not been appealed. The law is clear that where a trustee attempts to transfer the trust realty to a purchaser in violation of the rights of a beneficiary in possession, the purchaser takes with notice of the equitable title, and the purchaser will not succeed in an attempt to eject the beneficiary. Bank of Arlington v. Sasser, 182 Ga. 474 (185 SE 826). Cf. Chapman v. Faughnan, 183 Ga. 114, 115 (187 SE 634) (beneficiary in possession may enjoin trespass by purchasers from her trustee).
This result is compatible with generally applied legal principles. "In all but a few jurisdictions, a purchaser of land has constructive notice of all facts af*323fecting the title of which he would have learned by an inspection of the premises. It is, therefore, the general rule that, if land is in possession of any one other than the vendor, a purchaser takes title subject to all existing rights and equities of the person in possession.” 2 Patton on Titles 603, § 674 (2d Ed. 1957).
It is true that Mrs. Yancey, by allowing title to the property to stand in another’s name, contributed to a confusing situation. However, this does not undercut her right to prevail in this lawsuit. We note with reference to concepts of estoppel that estoppel must be specially pleaded (Code Ann. § 81A-108 (c)), and none of the three defendants here pleaded estoppel in his answer to Mrs. Yancey’s complaint. Nonetheless, assuming estoppel had been an issue, we find that the classical elements giving rise to an estoppel, including either intentional deception or gross negligence, are not present here in Mrs. Yancey’s actions: "In order for an equitable estoppel to arise, there must generally be some intended deception in the conduct or declarations of the party to be estopped, or such gross negligence as to amount to constructive fraud, by which another has been misled to his injury.” Code § 38-116. Moreover, Siegel and Zimmerman, who exercised no diligence in their own behalf to discover her interest, have not positioned themselves to claim estoppel against her: " '... the party who claims the benefit of estoppel... must have acted in good faith and reasonable diligence; otherwise no equity will arise in his favor.’ 2 Pomeroy’s Equity Jurisprudence (4 Ed.), § 813 "Johnson v. Ellis, 172 Ga. 435 (5) (158 SE 39). (Emphasis supplied.)
In summary, there is no rule of law in Georgia, statutory or otherwise, which denies to Mrs. Yancey the right to hold and enforce equitable title to this land while she allows legal title to stand in the name of another. However, there is a rule of law, Code § 85-408, which required of defendants here that they ask her the source of her claim to the land in light of her flagrant, sole possession of it. Their loss here is not traceable to her actions, but to their own failure to perform their statutory duty to inform themselves through inquiry as to the true state of the title. Had they inquired and had Mrs. Yancey misrepresented anything to them, then questions of *324estoppel might conceivably arise. But there was no inquiry made of her; no misrepresentation; and no notice to her of her son-in-law’s actions until it was too late to prevent his giving the deed. She is not estopped to assert her claim. Code § 85-408 establishes a flat rule that one is not estopped to claim land by the mere act of allowing legal title to stand in the name of another.
The sole argument of defendants, on which they must stand or fall, is that the general rule homeowner relies on does not apply where there is a familial or other relationship between the record owner and the possessor sufficient to suggest that the possessor holds the land at the permission of the other and not inconsistently with the other’s title.
The directed verdict for defendants is reversed because the rule of law on which their case is founded does not exist in Georgia. The law might support their position if the son-in-law resided on the property with the homeowner, but he does not. "To operate as notice, the possession must be open, visible, exclusive, and unambiguous, not liable to be misconstrued or misunderstood. It must not be mixed or ambiguous possession. So it has been held that possession of land by the grantee, holding under an unrecorded deed, together with the grantor, is not constructive notice of the unrecorded deed to a subsequent purchaser. Wells v. American Mortgage Co., 109 Ala. 430 (20 S 136). Where a widow contributed a part of the purchase-money of a farm, and her brother, who contributed the remainder, took title thereto in his own name without her knowledge, it was held that the fact that she lived on the farm with him did not give notice of her resulting trust to a purchaser from him. Harris v. McIntyre, 118 Ill. 275 (8 NE 182). The correct rule is that when the occupation by one is not exclusive, but in connection with another, with respect to whom there exists a relationship sufficient to account for the situation, and the circumstances do not suggest an inconsistent claim, then such a possession will not give notice of a right by an unrecorded grant. . . If, of two occupants, one has the record title, a purchaser has the right to assume that the other has no title. [Cits.]” McDonald v. Dabney, 161 Ga. 711, 725 (132 SE 547). *325(Emphasis supplied.) Accord, Manning v. Manning, 135 Ga. 597 (3) (69 SE 1126); Goodwynne v. Bellerby, 116 Ga. 901 (5) (43 SE 275).
Argued March 11, 1975
Decided April 30, 1975.
Nicholas N. Sears, for appellant.
Seigel, Grade & Amato, Alvin N. Seigel, for appellees.
However, where, as here, there is no joint occupation of the land involved and defendants must rely solely on a claimed familial relation between the one in possession and the record title owner, the law does not support them. In Hall v. Turner, 198 Ga. 763 (32 SE2d 829), the possession of a father and mother was held sufficient to put a purchaser upon inquiry where the son, to whom the father and mother had deeded the property under an agreement that they might remain in possession for their lifetimes, attempted to sell without a reservation of their rights. To the same effect is Waddell v. City of Atlanta, 121 Ga. App. 94 (172 SE2d 862), wherein the possession of a wife and children under an award of temporary alimony was sufficient to give notice to a prospective purchaser from the husband. Also, in Lewis v. Lewis, 210 Ga. 330 (80 SE2d 312), "[t]he actual possession of the home place by the wife and children was sufficient to put Graham [the husband’s attorney who was paid with a deed to the premises] on inquiry as to the claim under which she held possession. Code § 85-408. . Id. at 334-335.
The trial court erred in directing a verdict for the son-in-law’s grantee, Siegel. Zimmerman, as a remote grantee, stands in no better position (Coffey Enterprises Realty &c. Co. v. Holmes, 233 Ga. 937; Chandler v. Ga. Chemical Works, 182 Ga. 419 (1b) (185 SE 787, 105 ALR 837)), and the direction of a verdict for him was also error.

Judgment reversed.

All the Justices concur, except Gunter, Jordan and Ingram, JJ., who dissent.