Court Opinion

ID: 7053797
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:03:42.116355+00
Date Added: 2024-06-11T16:11:52.641021
License: Public Domain

On Petition fob Reheabing.
Jordan, J.
Appellant petitions for a rehearing upon the grounds, substantially, that the court erred, (1) in holding that the assignment of the mortgage in suit was subject to the registry act of 1877; (2) in holding that appellee, Whitson, was a bona fide purchaser; (3) in holding that the burden of proving that she had notice rested upon appellant; (4) in deciding that the evidence was not in the record.
Counsel in their brief filed in support of this petition disclaim any desire to re-argue the proposition originally advanced that the decision in the case of Connecticut, etc., Ins. Co. v. Talbot, 113 Ind. 373, is unsound; with the exception, however, that it is again insisted that a registry *678law will only be given a retroactive effect when by its express terms it allows a reasonable time after its passage for the registration of instruments executed prior thereto. It was affirmed in the Talbot case that when the provisions of the act of 1877, and the circumstances which led to. the enactment of that law, were taken into consideration, there could be no doubt of its being applicable to the transaction in that case.
It is not true, because a registry law is not made in plain terms to apply to deeds and other instruments previously executed, it consequently must be interpreted so as to relieve the holders of such instruments from recording them. In deciding that the act of 1877 applied to mortgages of record at the time it took effect, we were not necessarily required to give the statute a retrospective construction. Neither can it be successfully asserted that such holding disturbs any vested rights of appellant. The mortgage, which it held by assignment, was of record when the law in question went into effect, but the assignment thereof had not been recorded. It certainly can not be said .that it is a strained construction to hold that the law applied to such mortgages and required the previous assignments thereof to be recorded. The act simply assumed a regulation over such previous assignments as the one in question so as to require them, under its provisions, to be recorded, as we held, within a reasonable time after it went into force. To construe the act in controversy as applying only to mortgages of record, which were assigned after its passage, would, as held in the Talbot case, defeat the very object of the legislature in the remedy intended. Had the legislature intended, by the enactment of this law that it should be limited only to assignments made after its passage, it is not unreasonable to presume that the lawmakers would have used apt words to express such intention instead of employing terms which apply equally to assignments in esse at the time of its passage, as they do to those made thereafter. Having again carefully considered the authorities and arguments presented by counsel for appellant, we are *679still satisfied with the conclusion reached at the former hearing in respect to the construction of the act of 1877, and that, under the facts, appellee Whitson must be deemed to be a tona fide purchaser, and that the evidence, for the reasons stated in the original opinion, is not in the record.
It is next earnestly contended that we erred in holding that the burden of proving that appellee had actual notice of the existence of the assignment at the time of her purchase rested upon appellant. The latter was the plaintiff below, and its mortgage, as we held, was subject to the provisions of the registry statute in question, and, having failed to place the assignment thereof upon the public records, certainly then, in order successfully to enforce its mortgage lien against the premises in the hands of appellee, it was required both to allege and prove that she, at the time of her purchase, had actual notice of the unregistered assignment. Appellant, under its complaint at least, undertook to advance the claim that the land held by her was subject to its mortgage; hence, in view of the statute, to sustain this- claim against her, under the circumstances in .this case, it was incumbent upon it to produce proof to show that she was affected at the time of her purchase by either constructive- notice, such as the public record would have afforded in case the assignment had been registered, or by actual knowledge thereof; otherwise, in the language of the law itself, she would hold the premises “free and discharged of the mortgage lien.” Or, in other words its failure to record the assignment as the law provided would render the mortgage void as against appellee, unless it could be shown that she had actual notice. §2931 R. S. 1881, and Horner 1897, §3350 Burns 1894.
The right of appellant to foreclose its mortgage against the lands in her hands, under the circumstances, was, to an extent at least, based upon the fact that she had notice of the unregistered assignment. The actual notice mentioned in the statute in question was intended to be equivalent to the constructive notice which would be afforded to subsequent *680purchasers or mortgagees by recording the assignment. If the subsequent purchaser has either the constructive notice which the record affords, or, in its absence, actual notice of the unrecorded assignment, then the protection given him by law, by reason of the fact that he is a purchaser for value, will be destroyed. A purchaser who has actual notice of an unregistered instrument may be said to be in the same condition as if he were affected with the knowledge which the record of its registry -would have furnished. While actual notice of an unregistered deed or instrument will be as effectual as that furnished by its formal registration, still the former notice, in order to be effectual, must be brought home to the party to be affected thereby. Wade on Notice, §231; Curtis v. Mundy, 44 Mass. 405.
We have, in support of the rule which we affirmed at the original hearing, in respect to the burden of proving notice, supplied our opinion with a citation of the decisions of this court in regard to the rule recognized and upheld in the foreclosure of an unrecorded mortgage against a subsequent purchaser or mortgagee. In the case of Schmidt v. Zahrndt, 148 Ind. 447, it is said, on page 455 of the opinion: “The rule in this State is, that when it is shown, by the complaint or cross-complaint to foreclose a mortgage, that any of the defendants are subsequent mortgagees, that it must be alleged and proved that they took said subsequent mortgage with actual notice of the mortgage sued upon, or that it was recorded within the time fixed by statute, or before the execution of the subsequent mortgage.”
This last decision, and the others which it follows, disclose the interpretation in respect to the proof of notice which this court has given to §2931 R. S. 1881, and Homer 1897, §3350 Burns 1894, which requires that every conveyance or mortgage of lands, or any interest therein, shall be recorded, etc., and if not so recorded, such instrument shall he fraudulent and void against any subsequent purchaser or mortgagee in good faith for a valuable consideration. Cer *681tainly there can he no sufficient reasons assigned for asserting a different rule to control in cases, like the one at bar, involving the right of the foreclosure of a mortgage, the assignment of which is governed by the registry act of 1877.
Appellant’s mortgage, on account of its neglect to' record its assignment, could have no force against appellee except upon the condition that it brought actual notice home to her.
It is true, as a legal proposition, that whenever, in the course of litigation, it becomes essential to affect a party with notice of a fact, the burden of proving such notice is upon the party who is required to allege it in his pleadings.
It must be remembered that appellant, in this case, was the plaintiff or actor in the lower court, seeking to enforce the right of foreclosing its mortgage against appellee’s land, and, in order to exempt its mortgage lien from the results which the Statute declares shall follow a failure to register an assignment, it was, as the authorities affirm, required to bring actual notice home to appellee. The latter was not seeking to enforce any right. By her answer she simply sought to defend against the right which appellant, under its complaint, asserted; and, while it is true the burden was upon her to prove that she was a purchaser for value, otherwise appellant would have prevailed regardless of the question of notice. The mere fact, however, that she denied in her answer what appellant w^as required to prove, did not, under the circumstances, east the burden upon her of proving such negative. The rule which we affirm upon the point involved depends in a manner upon the interpretation of the statute, and, hence, the cases of Giberson v. Jolley, 120 Ind. 301, and Schmueckle v. Waters, 125 Ind. 265, and others of like character cited by appellant, which assert a rule applicable to commercial paper, are therefore not in point. Neither are those which affirm that, where a negative fact is essential to the existence of a right sought to be enforced, the party claiming the right has the burden of proving such negative.
*682We adhere to the conclusion reached at the former hearing upon the point involved, and the petition is therefore overruled.