Opinion
September Term, 1890.
Entries and Grants — Warrants for Surveys — Rights of Purchasers — Notice — Parol Evidence — Evidence — Judge's Charge.
1. In an action to declare the defendants trustees for plaintiff's benefit, as to certain lands, the "entry" to which he had purchased from one of the defendants, he introduced in evidence a memorandum made at the time of paying part of the purchase-money, signed by this defendant and showing a balance of forty dollars due "on a certain land-warrant trade, 28 November, 1888": Held, parol, evidence of what "trade" this paper referred to, and its terms, was admissible.
2. Entry upon lands, and obtaining a warrant for survey, confers upon the person entering no estate or interest therein, but simply the right to be preferred when the money is paid.
3. Such "inchoate equity," or "preemption right," may be assigned by parol.
4. Purchasers of such an interest for value are affected with notice of all the facts respecting the rights of the vendor who made the entry within their knowledge, or which inquiry, after notice, would have disclosed.
5. Where the defendants, purchasers, were expressly informed by their vendor that the plaintiff was to get the grant out of the office of the entry-taker, and knew that plaintiff had the warrant in his possession, and that, in order to obtain it, he must be paid for it: Held, that there was no error in the charge of the court that, if the jury believed these facts, such defendants were charged with notice of everything affecting the plaintiff's claim which they might have discovered by inquiry.
APPEAL at Spring Term, 1890, of WILKES, from Merrimon, J.
R. B. Glenn for plaintiff. (497)
T. F. Davidson for defendants.
The plaintiff alleged, in substance, that the defendant Pipes, having made an entry for the land in controversy, and having a right to take out a grant for the same, assigned it for value to the plaintiff, the plaintiff paying a part of the price agreed; that, after the land was surveyed, and duly certified, the papers were handed over to plaintiff to enable (493) him to obtain a grant from the State; that the plaintiff forwarded the same, with the necessary money, to the Secretary of State; that, on 15 December, 1888, the grant was issued, but in the name of said Pipes; that, after the transaction with Pipes, said Pipes conspired with J. B. Hodges and the other defendants to defeat the plaintiff's rights, and, in pursuance of said conspiracy, Pipes executed a conveyance to the said defendants; that these defendants had notice of the transaction between Pipes and the plaintiff. It is also alleged that plaintiff has tendered the said Pipes the balance of the purchase-money for said assignment, which he has refused to accept.
The prayer is, that the defendants be declared trustees for plaintiffs, and that they convey to him, and for other relief.
The answers deny the material averments of the complaint, and the defendant J. B. Hodges and others allege that they are purchasers for value and without notice.
1. We are unable to perceive any error in the admission of the oral testimony of the plaintiff as to the transaction between him and the defendant Pipes. The latter had made an entry of the land and obtained a warrant to survey the same. This conferred upon him "no estate or interest in the land, . . . but simply the right to be preferred when the money was paid and the other formalities required by the statute complied with." Hall v. Hollifield, 76 N.C. 476.
"The entry," says Justice Avery, in Gilchrist v. Middleton, post, 663, "creates an inchoate equity, which, upon the payment of the purchase-money to the State within the time limited by the law, will entitle the enterer to a grant." This "inchoate equity," or "preemption right," may be assigned by parol, and in Hall v. Hollifield, supra, such a transfer is assimilated to the assignment by a purchaser of his bid at an execution sale. This being established, it must follow that the testimony was properly admitted unless the parties undertook to put their contract in writing. They did not do this, as the receipt is simply evidence of a part payment by the plaintiff pursuant to the oral agreement, and is not contractual in any respect.
2. The jury having found that the plaintiff purchased the (498) "entry" of the said Pipes and paid the purchase-money to the State, it becomes important to inquire whether the other defendants, who afterwards purchased of Pipes, are affected with notice of plaintiff's claim. There was evidence which tended to show actual notice, but the exception is to the charge of the court that if the jury believed the testimony of the two Hodges "they had notice of facts and circumstances to put (them) the defendants on inquiry as to the plaintiff's claim, and to affect them with notice of everything which they might have discovered by such inquiry." The principle of constructive notice, as stated in the instruction, is fully sustained by the authorities (Bunting v. Ricks, 22 N.C. 130; Hulbert v. Douglas, 94 N.C. 122), and it is only necessary to determine whether it was properly applied to the facts of this case. "A purchaser is not affected by vague rumors, hearsay statements and the like concerning prior and conflicting claims upon the same property . . . . On the other hand, the proposition is established by an absolute unanimity of authority, and is equally true, both in its application to constructive notice and to actual notice, not proved by direct evidence, but inferred from circumstances, that if the party obtains knowledge or information of facts tending to show the existence of a prior right in conflict with the interest which he is seeking to obtain, and which are sufficient to put an ordinarily prudent man upon inquiry, then it may be a legitimate, and, perhaps, even necessary inference that he acquired the further information which constitutes actual notice." 2 Pom. Eq. Jur., sec. 597. If he does not, in fact, make inquiry, he is "affected with knowledge of all that the inquiry would have disclosed." Ruffin, C. J., in Bunting v. Ricks, supra. Tested by the foregoing principles, we are clearly of the opinion that the evidence of the said defendants warranted the instructions as given by his Honor. (499) These defendants were about to purchase the interest of Pipes in his alleged entry, and they were expressly informed by Pipes that plaintiff "was to get it (the grant) out of the office." They were also aware that the plaintiff and Pipes had been engaged in some transaction by which the latter had received money or goods from the former, and that the plaintiff had the "warrant" in his possession, and that, in order to obtain the same, it was necessary that the plaintiff should be paid. This is manifest from the statement of the defendants that, at the time of the execution of the bond for title and the first payment, Pipes told them that "he would take the money we paid and go and pay Bryan and bring the papers." Notwithstanding all this information, strongly tending to show that the plaintiff had an interest in the entry, the said defendants blindly purchased the alleged rights of Pipes without making any inquiry whatever. The bare statement of these circumstances must inevitably lead to the conclusion that the defendants were put upon inquiry. The fact that Pipes accompanied the information thus given with explanations tending to show that the plaintiff had no interest in the entry, did not in any way relieve the defendants from the duty of making due inquiry of the plaintiff, or otherwise investigating the nature of his claim.
This, it seems, would be otherwise where the information is obtained from third persons having no interest in the transaction, but where the information is obtained from the vendor, "the purchaser, according to the weight of authority, is not warranted in accepting and relying upon this explanation or contradiction . . . . The reason is plain. The informant is under a strong personal interest to misrepresent or conceal the real facts." 2 Pom. Eq. Jur., sec. 601; LeNeve v. LeNeve, White Tudor, L. C. Eq., 159, note.
No error. Cited: Holden v. Purefoy, 108 N.C. 172; Ross v. Hendrix, 110 N.C. 405; Loan Asso. v. Merritt, 112 N.C. 246; Kimsey v. Munday, ib., 827; Hill v. R. R., 143 N.C. 566; Bowser v. Westcott, 145 N.C. 70; Wilson v. Taylor, 154 N.C. 218; Wynn v. Grant, 166 N.C. 45.
(500)