Court Opinion

ID: 6676444
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:16:23.453359+00
Date Added: 2024-06-11T09:09:46.781992
License: Public Domain

Mr. Justice McGowan,
dissenting. The single question in the case is whether a judgment recovered on a debt older than an unrecorded mortgage without notice, has priority over the mortgage though subsequent in date. It is manifest that this must be determined by the force and effect of the law as to registry. It has frequently been said, and certainly with great truth, that our registry law, before the act of 1843, concerning mortgages “was lamentably obscure and deficient,” and we may add, especially upon the very point now made. The registry laws naturally embrace only deeds, conveyances, and such other instruments as can only be known to the world by recording, while a *585judgment, which has a lien as well as a mortgage, is already of record and needs no further recording. It seems to me probable that this natural omission in the registry law of all reference to judgment creditors, has led to the effort to exclude them from the protection given to other subsequent incumbrancers without notice, and while ignoring altogether the judgments, to remit them back to the condition of simple subsisting creditors for whose protection no special provision is made by the registry law.
In Ash v. Ash (1 Bay, 306), as early as 1793, it was held, in reference to a mortgage which had been mislaid and on that account had not been recorded, “that the plaintiff’s mortgage had not lost its lien by the entering up of subsequent judgments. The mortgage was not void by not being on record,” &c. This decision was followed by a series of cases, but we think it may be truly said that it was never satisfactory to the bench or the bar of the State. In Smith & Ravenel v. Smith, 1 McCord Ch., 148 (1825), Judge Nott said: “I must confess I have never been perfectly satisfied with that decision. [Ash v. Ash] But it has been received as law and acted upon for upwards of thirty years, and ought not to be questioned.” In Barnwell v. Porteus, 2 Hill Ch., 221 (1835), Judge Evans, sitting for Chancellor Harper, said: “If this were now a new question, I should have great difficulty in making up my opinion, but I am relieved by former adjudications from any difficulty on the point,” &c.
And in Steele v. Mansell, 6 Rich., 442 (1852), where, after great argument and much deliberation, the old Court of Errors was divided, Judge Wardlaw, who delivered the opinion of the majority of the court, said: “In vain may it now be shown that Ash v. Ash, and other cases out of which the rule grew, were decided altogether in reference to the act of 1698, at places where and at times when the act of 1785 was not considered to be of force. However introduced, the rule, ever since 1799, has been acted on.” And at another place, “It may be that this was not a correct construction of the section, and that it would have been better to hold that a judgment entered is like a mortgage recorded, and by the section an unregistered deed is made ineffective to withstand the lien of the judgment, which attaches as if there was no such deed, unless notice of it has come to the *586.creditor from change of possession or other circumstances,” &c.
The registry laws of the State and the decisions under them were in this very doubtful condition when the legislature passed the act of 1848, in reference to mortgages, and followed it up by the act of 1876, as to “all instruments in writing required by law to be recorded.” This act, now embodied in section 1776 of the General Statutes, substantially re-enacted that of 1843, with certain additions, expressly repealed all former laws “inconsistent with it,” and, as we suppose, was intended to be a system of registry, superseding all other laws upon the subject. See Williams v. Beard, 1 S. C., 322. If in this we are correct, we need not perplex ourselves with the confusion and inconsistencies which existed under the old law, but address ourselves to the effort to give proper construction to the new, availing ourselves, of course, of all the light afforded by the former.
What, then, is the proper interpretation of the act of 1876 upon the point, whether a subsequent judgment creditor without notice has priority over a mortgage which was never recorded ? The provision is as follows: “All deeds of conveyance of land, all deeds of trust, &c., all mortgages or instruments in writing in the nature of a mortgage of any property real or personal * * * and generally all instruments in writing now required by law to be recorded, &c., delivered or executed, &c., shall be valid so as to affect, from the time of such delivery or execution, the rights of subsequent creditors or purchasers for valuable consideration without notice, only when recorded within forty days from the time of such delivery and execution, &c., &c. Provided, nevertheless, that the above mentioned deeds or instruments in writing, if recorded subsequent to the expiration of said period of forty days, shall be valid to affect the rights of subsequent creditors and purchasers for valuable consideration without notice, only from the date of such record.”
In giving interpretation to the act we can derive little assistance from decided cases, for since its passage no case has arisen involving the very point. The case of McNamee & Co. v. Huckabee (20 S. C., 190), was upon the question of priority between two absolute deeds, both of which were recorded out of time; and the case of King v. Fraser, recently decided, was in reference to *587the effect of a mortgage recorded out of time, upon the unsecured debts of the mortgagor, contracted between the date and the registry of the mortgage. There was no question in it as to the effect of a subsequent judgment as against a mortgage that was never recorded. That question is now before us for the first time under the act of 1876. Considering all the parts of the act together as making a system of registry, it seems to me that three things are manifest: first, that all the kinds of instruments mentioned, including mortgages, are required to be recorded; second, that if recorded within forty days, they shall be valid from their date, but if not recorded within that time, they shall be valid only from the date of said record; and, third, as a necessary consequence of the foregoing, that if not recorded at all, they shall never be valid. As was said by Mr. Justice McIver in Piester v. Piester (22 S. C., 146): “The necessary effect of this declaration is, that an unrecorded mortgage is void — is in fact not a mortgage — whenever the effect of so regarding it would be to affect the rights of a subsequent creditor without notice.”
So far, then, there is no difficulty. But, notwithstanding this evidence of the spirit of the act, in the strong penalty imposed for not recording, it is urged that this refers only to subsequent creditors, and that all others are left precisely in the same condition they would have occupied if there never had been a registry law; and, therefore, if a creditor of that class recovers a judgment against his debtor, that judgment must still retain the character of a subsisting debt, and cannot become a subsequent ■ incumbrance, and entitled to protection as such. The act certainly does not say any such thing, and in view of its manifest object, we do not feel authorized to make that inference merely from its silence upon the subject. It seems to me that this view overlooks the fact that all mortgages are required to be recorded; that, in the interest of fair dealing, registry is the settled policy of the State. A mortgagee who does not record his mortgage surely disregards the law — puts it in the power of the mortgagor to impose on others, and subjects himself to dangers which are not confined to subsequent creditors, but may as well grow out of the class of subsisting creditors. ' Indeed, I could never perceive any great difference between subsisting and subsequent credi*588tors, as to a mortgage which was never recorded, and of which neither had notice — the property never changing hands, but all the while remaining in the possession of the debtor, and to all appearance unincumbered. The simple fact is, that neither knows that there is a mortgage, and both trust upon faith, that the property is as the record shows it.
It is true that a mortgage is good between the parties, although not recorded. They have notice, and, of course, the registry act does not apply to them, but was meant for other creditors. If a subsisting creditor without notice obtain a second mortgage which he records, can there be a doubt that he would be entitled to precedence over an unrecorded mortgage ? Williams v. Beard, supra. If he obtain an absolute conveyance, he would also have precedence; and that, too, if the sale were made by the sheriff under a judgment recovered on a subsisting debt, and the judgment creditor himself becomes the purchaser. This is clearly put by Chancellor Inglis in McKnight v. Gordon (13 Rich. Eq., 249), where he says: “In Barnwell v. Porteus, supra, the execution under which the land was sold had been lodged on a judgment entered after the execution of the mortgage, and the debt, which had been the cause of action therein, had been contracted before the making of the mortgage. It wrns expressly decided that the fi. fa. in the sheriff’s hands against the mortgagor conferred upon the officer no power and authority to levy upon and sell the whole absolute estate in the lands. Yet the purchaser, although he was himself the creditor, was permitted, as a purchaser who had first recorded his deed, to hold against and over the mortgage,” &c.
That is to say, if Congdon, Hazard & Co. had actually forced a sale, and become the purchasers and recorded the sheriff’s deed, their title would have been good against and over the mortgage. This most conclusively shows that under the old law the creditor, by obtaining judgment, ceased to be merely a subsisting creditor, and therefore the principal reason why the law as it then stood, did not protect the judgment itself before actual sale under it, must have been the circumstance that it was not like a mortgage, regularly recorded or capable of record in the register’s office. Now that we are endeavoring to give construction to the *589new registry law so as to make it uniform and symmetrical, and are not embarrassed by the conflicting interpretations of the old, we hesitate to adopt a distinction which seems technical and shadowy, was never satisfactory, and which caused, and if followed will continue to cause, great confusion and injustice.
It was soon perceived that so far as the rights of the delinquent mortgagee were concerned, there was small difference between a judgment lien with the power to sell, and an actual sale and purchase under it. In Freeman on Judgments, section 866, the author says : “The purchaser at a sale under a judgment is, to the same extent as if he were purchaser at a private or voluntary sale, protected from claims previously acquired by third persons from the judgment debtor, of which he had no actual or constructive notice. * * * In some of the United States, however, the registry laws so modify the effect of conveyances and other instruments concerning real estate, as to give a judgment lien precedence over any unrecorded instrument, of which the judgment creditors had no knowledge at the date of the attaching of the lien of his judgment; and the holder of the lien takes all the title the records show to be in the judgment debtor,” &c. And in a note the learned author says: “The tendency of the recent statutes and the decisions interpreting them, is to give a judgment lien precedence over a prior unregistered conveyance or encumbrance, especially if a plaintiff have no notice of it when his judgment was docketed or registered, or the levy of his writ made” — citing numerous authorities from Texas, Alabama, Georgia, Virginia, West Virginia, and Illinois.
A judgment is, for most purposes, to be regarded as a new debt, and this new debt is not in general affected by the character of the old one. Freeman, section 217. It is itself a thing of record, and has a lien from its date without further recording; and, in view of the spirit and scope of the act of 1876, and to promote its declared policy of enforcing registry by penalties upon those who disregard its provisions, it seems to me that a subsequent judgment without notice should be held to be what it really and substantially is — a subsequent encumbrance in the sense of the act, or, in the words of Judge Wardlaw, “that a judgment entered is like a mortgage recorded,” and as such *590entitled to the protection afforded by the act. This precise point was touched but not decided in Boyce v. Shiver (3 S. C., 520), in which Judge Glover said: ‘T apprehend no case can be found since the passage of the act of 1848, where a mortgage not recorded within the prescribed time, has been held to be a preferred lien against a subsequent judgment creditor without notice.”
The whole policy of our law is against secret liens of every kind and form. It was in this view that our courts discarded the old English doctrine of the lien of the vendor. See Herring & Co. v. Cannon (21 S. C., 217), citing, among others, the case of McCorkle v. Montgomery, 11 Rich. Eq., 132, in which Chancellor Dunkin said: “Upon this subject the language of Chief Justice Marshall in Bayley v. Greenleaf (7 Wheat., 46) is instructive : To the world, says he, ‘the vendee appears to hold the estate, divested of any trust whatever, and credit is given him in the confidence that the property is his own in equity as well as in law. A vendor relying upon this lien ought to reduce it to a mortgage, so as to give notice of it to the world. If he does not, he is in some degree accessory to the fraud committed on the public, by an act which exhibits the vendee as the complete owner of the estate, on which he claims a secret lien. It would seem inconsistent with the principles of equity and with the general spirit of our laws that such a lien should be set up in a Court of Chancery, to the exclusion of bona fide creditors.’ It may be added” (says Chancellor Dunkin) “that the act of 1843, requiring all mortgages of real estate, however formal and perfect, to be recorded within sixty [now forty] days, may be regarded as a legislative declaration of the prohibitory policy of the country against any such secret liens.” And Chief Justice Moses, in Boyce v. Shiver, supra, well said: “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 candes 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 *591permitted them; and but few judges in our country, whilst also following the authority of names whieh preceded their own, have failed to declare their determination not to extend them beyond the limits to which they have been carried,” &e.
I think the judgment below should be affirmed.
Judgment reversed.1