Court Opinion

ID: 7275736
Source: CourtListenerOpinion
Date Created: 2022-07-25 19:59:12.46024+00
Date Added: 2024-06-11T16:18:51.017013
License: Public Domain

Mr. Justice Morris
delivered the opinion of the Court:
The question in this case, as we understand it, is which of two innocent persons should be required to suffer the loss occasioned by the wrongful act of a third person, the one who, by his negligence or inadvertence, has placed it in the power of such third person to perpetrate the wrong which otherwise would not have been perpetrated, or the one who, without any negligence on his own part, has been misled by the wrongdoer into a situation into which otherwise he would not have entered. And in the light of modern equity, of the overwhelming mass of modern judicial decision, and of what seems to us to be the dictate of natural justice, that question, in our opinion, can admit of but one answer.
The argument on behalf of the complainant, it is true, proceeds upon an entirely different theory; and that is, that he never parted with the title to his property by the delivery of his deed, and that the. deed, having been abstracted from him without his knowledge and consent, could constitute no basis of right in the appellants. But the answer to this is, that, if the complainant placed it in the power of Williams to obtain such control over the deed as he did obtain and to use it as he is shown to have used it, he, the complainant, is estopped from proving that there was no delivery of the deed.
Delivery of a deed is as necessary now as it ever was to the complete efficacy of the instrument; but much of the ancient law upon the subject, in consequence of changed conditions, has become obsolete. The actual possession of title deeds is no longer a matter of paramount importance ; we rely more upon records than upon original documents for the security of our titles. Consequently delivery is very generally presumed, whenever it appears that there is prima facie evidence of execution. Possession of a document by a person who claims under it is prima facie evidence of the delivery of the instrument, and throws upon *345the maker of it the burden of proof that it never was delivered. As between grantor and grantee, the question of delivery is one to be determined by a fair preponderance of evidence. But when rights of third persons have intervened, the proof of non-delivery should be clear beyond reasonable doubt; and in many cases the grantor will be absolutely estopped from denying the delivery. The doctrine of equitable estoppel in such cases has received great development and extensive application in recent years ; and the result has been that we cannot any longer follow the theory of the law laid down in many of the older adjudications. Without denial of the rule that no deed of conveyance is complete until it is, not only executed, but actually, freely and voluntarily delivered, it is a paramount principle of equity that, when situations have been created by the action, inaction or negligence of parties, they should not be permitted to take advantage of them to the detriment of those innocent persons who have been, without negligence of their own, led to act upon such situations.
The present is no case of escrow; and if it were, we are not sure that we would feel bound by the older decisions on that subject. The practical operation of the arrangement between the parties here is that the deed in controversy was delivered by the grantor to the grantee, upon condition only that it should not become effective until the happening of a certain contingency; and that if the contingency did not happen, the deed should be void. It was placed in the power of the grantee by the deliberate action of the grantor to take possession of the deed, and to perpetrate the fraud which he perpetrated. The deed was placed in a box ; the key of that box was delivered to the grantee, with light of access to it at any time; and in contemplation of law, that must be held to have been an absolute delivery. It is plainly of no consequence that the complainant also had a key to the box, and free access to the deed; for the question is not what the complainant might do, but what he placed in the power of the grantee to do.
*346Nor does it seem to us to be of any consequence whether the loan and trust company was or was not made a guardian of the good conduct of the parties and an overseer of their behavior in their access to the box. Such guardianship besides being extraordinary and unusual, and possibly beyond the right of the parties to impose upon the company under the circumstances of this case, was no more at the utmost than an agency for either party; and it is not apparent how its failure to perform that duty to the parties, if it assumed to perform it, could be held to invalidate a deed in the hands of third parties. The complainant, so far as the rights of the appellants here are concerned, might just as well have stationed a watchman at the door of the record office to arrest any attempt on the part of the grantee to enter that office in order to have that deed recorded. If the grantee eludes the watchman, or even if the watchman fraudulently colludes with the grantee to do that which he has been employed to prevent, we fail to see what bearing his default can have upon the rights of innocent parties who knew nothing of their fraud.
The deed having thus been delivered to the grantee with practically absolute power to do what he pleased with it, the fact that he disregarded the condition under which it was delivered, violated his trust, and made a fraudulent use of the instrument, cannot be held to invalidate it in the hands of third parties. This is the unanimous holding of all the authorities on the subject, and it is consonant with reason, and required by the safety of society. Butler v. United States, 21 Wall. 272; Dair v. United States, 16 Wall. 1; Putnam v. Sullivan, 4 Mass. 45; Pratt v. Holman, 16 Vt. 530; Blight v. Schenck, 10 Pa. St 285. The case, as we have said, is not one of escrow, or of agency of any kind ; but of a grantee who, receiving in confidence that he would not use it except in a certain contingency, a deed of conveyance to himself, does in fact use the deed before the happening of the contingency and before he becomes entitled to use it as between himself and the grantor. We *347fail to find any authority that holds innocent purchasers for value chargeable with the result of such secret conditions. So to charge them would undermine all the safeguards of society, and restore the worst evils against which the statute of frauds and numerous other statutes were intended to guard. Very appropriately was it said by the Supreme Court of the State of Pennsylvania in the case of Blight v. Schenck, supra:
“ The first reflection which strikes us is, that, if a title may be avoided under such circumstances, no purchaser is safe. This is a strong case; for here the defendant is an innocent purchaser for value. He invests his money on the faith of the solemn acts and declarations of the plaintiff These acts and declarations were made, before a magistrate duly empowered for that purpose, certified to by him in proper form, duly recorded on the records of the county. * * * Moreover, it appears at the time of the purchase the vendee was in the actual possession of the premises. There was nothing to put him (the purchaser) on his guard. It must require a very strong case, as the plaintiff in error justly contends, to permit a grantor to aver, against the confidence thus reposed in his acts and declarations, exactly the opposite of those acts and declarations ; to say, after acknowledging before the proper officer of the law that he delivered the deed, that he never delivered it; and having acknowledged that he received the purchase money, that he never received it.”
That there was a great fraud perpetrated upon the complainant, is of course quite evident. But he was the victim of his own misplaced confidence, for which it is not just that he should make others suffer, who are wholly innocent. He thought that he was securing himself, and took what might be regarded as remarkable precautions for the purpose; and yet his arrangement was a most transparently flimsy and insecure one. Whether the arrangement was as the complainant testifies or as Mr. Hill testifies, whethei the stamped portion of the agreement of September 15, *3481892, was inserted in the presence of the parties and was assented to by them, or was an afterthought, is of no consequence. The legal right of the parties to have separate access to the box would have been the same without it as with it. The fact that each received a separate key corroborates that theory; and the very provision that neither party should, without the consent of the other, remove “Exhibit A” from the box, necessarily implies that each might have separate access to the safe. The complainant, therefore, plainly put it in the power of Williams to use the deed, if the latter chose to violate their private agreement, of which third parties could have no knowledge, which it seems he did choose to do; provided, also, if this was a superadded condition, that he could elude the vigilance of the loan and trust company, which also was successfully accomplished. It is clear to us, that, however well intended it may have been on the part of the complainant, this arrangement was legally an act of negligence of very grave character, and practically amounted to an invitation to Williams to do precisely what he did do.
Those who take risks should take the consequences of their risks, and should not seek to visit them upon innocent third parties. Escrows, secret conditions, secret trusts, private parol agreements in limitation of written contracts, have all elements of danger in them. As between the immediate parties, equity will not permit those to suffer who have honestly confided in others and whose confidence has been betrayed. But much less will it permit them to retrieve their loss at the expense of those who, relying upon their actions or representations, have become the innocent victims of the fraud which only those actions or representations enabled to be perpetrated.
We are aided in the view which we take of this case by the fact that the complainant has a practical remedy for the wrong which has been committed, while the appellants are wholly without effective remedy, if their deed should be declared void. Apart from the fact that, if his own conten*349tion be correct as to the alleged failure of the loan and trust company to perform its duty, the complainant has a right of action against that company for the default, it seems that the complainant’s loss may yet be amply covered by the assignment made by Williams of his interest in the Van Camp claim. It is a mitigating circumstance in the fraud perpetrated by Williams that, when he abstracted the deed of conveyance and other papers contained in the envelope marked “ Exhibit A,” he did not cany off his assignment of the Van Camp claim. That was left in the box, and is now in the possession of the complainant; and there seems to be no reason why it should not be availed of by him in due time.
For the reasons which we have stated, we find ourselves unable to concur in the view taken of this case- by the learned justice who heard it in the court below. It appears to us that there was error in that view. We think the case is one in which the complainant should be held to be es-topped from denying the validity-of his deed to Williams so far as the same is required to support the subsequent deed of trust from Williams to secure the appellant, Burton, and that this deed of trust should be sustained as a valid lien upon the property. Further than as it may be required as a support to the deed of trust, the deed from the complainant to Williams may, of course, be declared void.
It is our opinion, therefore, that the decree of the court below should be reversed, with costs; and that the cause should be remanded to that court, with directions to enter a decree in conformity with this opinion. And it is so ordered.