Court Opinion

ID: 9827841
Source: CourtListenerOpinion
Date Created: 2023-09-01 17:53:19.907823+00
Date Added: 2024-06-11T07:42:37.782585
License: Public Domain

On Motion for Rehearing.
[6, 7] Appellee misconceives the real holding in this case. We did not hold, nor intend to hold, nor did we intend to suggest, that the recitals in the note actually created the equitable vendor’s lien. Our opinion may not have been as adequately clear and expressive as it should have been. We will repeat, however, that an implied equitable lien arises merely incidental to a contract, on the equitable principle that when a vendor sells his land upon a deferred consideration, he is entitled to a lien which equity, not a contract, by virtue of the transaction creates in his favor. We acknowledged fully that Bishop had been paid for this land when Coker used his deed, with the name of the grantee left blank, in order to sell the land to Ingham. Coker, however, was the equitable owner of this land, which in law, divested of form, made him the real owner; no other person having a charge upon it. When he sold the land to Ingham and the latter executed a note which fully described the real estate, acknowledging that he owed so much money to Coker, the latter had an equitable vendor’s lien as security for the payment of that debt. When Ingham sold to Howe, the latter acknowledged the existence of the equitable vendor’s lien as a charge upon the land, in favor of Coker, and this recitation was read to Gray over the telephone by the county clerk of Lipscomb county. Coker’s disconnection with the record title is wholly immaterial — Gray knew as an actual fact that Coker had a note for the payment of which the land stood charged. As an original proposition to say that, because a note is payable to some one not connected with the chain of title, though it is expressed in a deed in the chain of title there is a lien or a charge existent for the purpose of paying that note; that such third party would not have a lien —we will not argue nor cite authorities to support. It is, of course, true that a recorded deed is constructive notice only of the facts it recites. That principle is applicable to constructive notice only. There is a notable exception that a party is chargeable with notice of what a reasonably prudent person, with knowledge of the facts recited would have ascertained by inquiry where the party had actual knowledge of the deed or its record. Neyland v. Lumber Co., 26 Tex. Civ. App. p. 421, 64 S. W. 696, and numerous cases cited.
[8] When Coker, who was the real owner of this land, used Bishop’s deed and sold the same to Ingham, and Ingham executed the note in controversy, which on its face is a negotiable note and transferable in the commercial world for all legitimate purposes, Gray was charged with that note, as long as he was not excused either by the record or by other sufficient aliunde facts, to constitute him an innocent subsequent purchaser. Of course if Coker and Ingham had released this note of record, though Cokef might previously have transferred it to Fennimore, and Gray, as a subsequent purchaser, bought from the record, without actual knowledge of the existence of the note, or of an equitable vendor’s lien, Fennimore would have been out, and that is the scope and import of the holding of the Supreme Court in Moran v. Wheeler, 87 Tex. 179, 27 S. W. 54. In Drumm Com. Co. v. Core, 105 S. W. 843, 47 Tex. Civ. App. 216, the previous vendor and vendee assured Core that the notes had been destroyed, and the vendee reconveyed back to the vendor and the vendor then conveyed to Core. What possible application this line of authorities could have to this character of case is beyond us. It is necessarily true that when one has an equitable right, disconnected from the record, another, who purchases the apparent title, is not affected. Spencer v. Jones, 92 Tex. 519, 50 S. W. 118, 71 Am. St. Rep. 870. If the party knew the equitable agreement or right inhering in a third party as affecting the land, though entirely separated from the record, the land would be purchased burdened. Same case.
Gray’s trouble is he is not a subsequent innocent purchaser under the statute; the lien in this case had been created by virtue of the actual sale of the land by the real owner. Gray had actual knowledge that the land was charged with a lien, and that a note was outstanding. It is not the deed that creates the equitable lien, strictly speaking. It is equity, originating it on account of the transaction. The lack of a written assignment of this note which carried the lien to Fennimore has not the slightest pertinency in so far as divesting Fennimore’s rights are concerned. Fennimore received what Coker possessed. Gray, knowing that a note was outstanding, is charged with notice of everything it contained with reference to the obligation of payment. According to the stipulations of the note, the interest was figured correctly.
The motion is overruled.