Opinion
12-10-1818
Rootes v. Holliday and Welch
Leigh for the appellant. Gilmer and Wickham for the appellees.
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This case is fully stated in the following able opinion of Chancellor Carr of the Winchester District, pronounced the 8th of July 1814, upon a Bill in which Thomas R. Rootes was plaintiff and William Holliday and James Welch were defendants.
" This is a bill, in the common form, to foreclose a mortgage executed by the defendant Welch to the complainant. The defendant Holliday is stated by the bill to be a purchaser with notice of the incumbrance. By an amended bill, it is stated that the defendant Holliday, at the time of his purchase, to indemnify himself, required and received of Welch a conveyance of sundry property lying in the western parts of this State. The defendants are called on for a particular answer to this fact. The defendant Welch states, that he never intended to mortgage to the complainant the land sold to the other defendant; that the mortgage was meant to comprehend certain military lands; that, having confidence in the complainant, he did not read over the mortgage before signing, and thus did not discover the fraud."
Note. Nothing was said in the amended Bill about a decree against those lands, to satisfy the plaintiff's claim: but there was a general prayer for relief. --Note in Original Edition.
" I consider this answer as disproved; and, therefore, shall take no farther notice of it. The defendant Holliday stated the particulars of his purchase; that the other defendant, in December 1799, applied to him to buy the land; that he shewed him a deed from Rootes, first, together with an open letter from him to Mr. E. Smith, in which are stated the sale to Welch, and the receipt of the money (1200l.) from him, and directing Mr. Smith to deliver possession, & c.: that, seeing every thing thus fair, he bought the land for about 1100l.; paid 100l. in cash; gave his bonds for 250l. and a house and lot in Winchester for the balance; and, at the same time, received a deed from Welch: that, some time after this, on sending the Deed, from Rootes to Welch, to Fredericksburg to be recorded, he was informed, for the first time, that the complainant had a mortgage; that it was now too late to retract from the purchase; for he had paid the 100l., conveyed the house and lot, which had been again sold and conveyed; and his bonds had been assigned away by Welch, and some assumed to the assignees. He expressly denies notice, of the plaintiff's lien, before his purchase and payments. In answer to the amended bill, he denies that, at the time of his purchase, payment, and receiving a deed from Welch, he took any conveyance of lands as an indemnity against the claims which might exist to the land bought of him; because, at that time, he had not the slightest suspicion that any such claims did exist; but that, some time after, hearing a rumor which made him fear that the complainant might have a lien on it; and seeing Welch denied it: he then asked Welch if he could give him any security for the title; who offered him, as the only security in his power, mortgages on lands in Berkeley and Hampshire. These the defendant took, and had them recorded; but, being informed that the lands were of little value, and Welch's right to them very doubtful, he has taken no farther step in the business, and is willing that the Court, if it thinks proper, should decree to Rootes all benefit arising from these liens. The Deed from Rootes to Welch is dated 12th December 1799; is acknowledged by Rootes, 14th May 1800, before the District Court holden at Fredericksburg, where Rootes lives, and recorded in Frederick County Court, 1st September 1800. The mortgage from Welch to Rootes bears equal date with the Deed; is proved by the subscribing Witnesses before the Fredericksburg District Court, 14th May 1800, certified and recorded in Frederick County Court, 1st September 1800. Welch is stated, in the bill and some of the mortgages, to be a resident of Greenbrier. The Deed from Welch to Holliday bears date 29th January 1800, and is recorded the succeeded February. The depositions of Hugh Holmes, Edward Smith, and Richard Holliday, prove the open letter and it's contents, but do not speak of it as containing an acknowledgment that Rootes had received the price of the land. Holmes farther states, that he examined the title papers then in Welch's possession; and, though he had no confidence in Welch's integrity, he was so well satisfied of his title, that he made him several offers for the land, and would have bought if they could have agreed. Holliday states his belief that the title papers, conveying the claim from M'Donald to Welch, were in Welch's possession. They are not in the record, except a Deed from Holmes and wife to Farish."
" This is a concise statement of the case, made by the Bill, and Answers, and the evidence in support of it. The only questions necessary to be discussed, grow out of the mortgage from Welch to Rootes. This, it will be seen by the dates, was not recorded until after the eight months (within which Deeds are required by the Act of Assembly to be recorded,) had expired. It is contended by the Counsel for the defendant Holliday, that he being a bona fide purchaser for valuable consideration without notice, the mortgage is void as to him; it not having been duly recorded. The Counsel for the Complainant, in the very ingenious and imposing argument delivered, and in the notes submitted, has rested his Client's cause on three points. He contends, first, that Holliday is a purchaser with notice; and that, therefore, as to him, the mortgage will be held good by a Court of Equity without recording; --2dly, that, Holliday having purchased, and received his deeds, before the expiration of the eight months within which the mortgage might have been recorded, the reason of recording as to him ceased, and, therefore, it will not be required by this Court in support of the mortgage: --3dly, that, by the delivery of the Deed (from Rootes to Welch) into the hands of Rootes, to be acknowledged for record, the defendant Holliday divested himself of the legal estate in the land; which was, by the same Act, revested in Rootes; that his subsequent acknowledgment of the Deed was a re-execution of it, to all intents and purposes, by which Welch's title was revived, but Holliday's not; and that, although it should be supposed that this hypothesis destroyed also the mortgage to the complainant, yet, as the title to the land is still in Welch the vendee, it ought to be held liable for the purchase money; and, on this ground also, the Bill must be sustained. Let us take up these points in order."
" 1st, As to notice. The Bill charges it: the Answer denies it positively; and there is no evidence of it in the cause. Indeed, it was not contended that there was actual notice, but that there were circumstances attending the transactions sufficient to put a prudent man on enquiry, and therefore sufficient to affect Holliday with constructive notice. It is certainly a rule in Equity, that whatever is sufficient to put a party on enquiry amounts to notice. I do not think, however, that the circumstances relied on here, are of that character; but this is a part of the subject which I shall not consider particularly, as I am of opinion that this is of that class of cases not open to constructive notice at all. There is a very strong resemblance (as it regards the recording of Deeds and Mortgages,) between the 4th section of our Act " for regulating conveyances," and the Statute of 7 Ann. c. 20, commonly called the Register Act. By our Act, (after directing the mode of recording,) it is said, " that all Deeds of Trust and Mortgage whatsoever, which shall be hereafter made and executed, shall be void as to all creditors and subsequent purchasers, unless acknowledged, or proved, and recorded according to the directions of this Act." The British Statute, after describing the kind of conveyances to which it extends, and saying that they shall be registered in the manner directed by the Act, adds, " that every such deed or conveyance, that shall, at any time after, be made and executed, shall be adjudged fraudulent and void against any subsequent purchaser or mortgagee for a valuable consideration, unless such memorial thereof be registered, as by this Act is directed, before the registering of the subsequent Deed or Conveyance." The Acts being thus similar, let us enquire what have been the English decisions on the subject."
" In Newland on Contracts, 509--10, it is said, " that, although the registry Acts declare that an unregistered deed shall be void against a subsequent purchaser whose deed has been registered, yet Courts of Equity have decided that, if the subsequent purchaser had notice of the prior unregistered deed, he ought not to prevail against the precedent conveyance; for it plainly appears to be the intention of the Acts to secure subsequent purchasers and mortgagees against prior secret conveyances and fraudulent incumbrances: therefore, where a person had no notice of a prior conveyance, there the registering his subsequent conveyance entitles him to prevail against the prior conveyance; but, if he had notice of it, then it was not such a secret conveyance by which he could be prejudiced: it is however to be remarked, (he adds.) that, in these contests between persons claiming under unregistered and registered Deeds, Equity will not relieve against the legal estate, which the subsequent purchaser has obtained by registering his Deed, unless (in the words of Lord Hardwicke) in the case of apparent fraud, or clear and undoubted notice; but suspicion of notice, though strong suspicion, is not sufficient to justify the Court in breaking in upon an Act of Parliament." Read also Sugd. Law of Vendors, 471--2; 3 Vesey jr. 478, Jolland v. Stainbridge: --Lord Alvanley says, " I must admit now that the registry is not conclusive evidence, but it is equally clear that it must be satisfactorily proved that the person who registers the subsequent deed must have known exactly the situation of the persons having the prior deed; and, knowing that, registered in order to defraud them of that title he knew at the time was in them." He adds, " I regret that the Statute has been broken in upon by parol evidence; and am very glad to find Lord Hardwicke, in Hine v. Dodd, (2 Atk. 275,) says, that nothing short of actual fraud will do." --In 3 Atk. 646, Leneve v. Leneve, Lord Hardwicke, speaking on this subject, says, (after reviewing several decisions,) " Consider what is the ground of all this, particularly in those cases which went on the foundation of notice: the ground of it is plainly this, that the taking of a legal estate after notice of a prior right, makes a person a mala fide purchaser; it is a species of fraud and dolus malus itself; for he knew that the first purchaser had the clear right of estate, and after knowing that, he takes away the right of another person by getting the legal estate."
Authorities might be multiplied; but these are abundantly sufficient to shew that Courts of Equity interfere in these cases upon the ground of fraud; and that nothing but clear proof of actual notice will authorize them to break in upon a positive Statute. These decisions appear to me to apply with increased force to our own Act, which, it will be observed, makes a marked distinction between absolute Deeds and Mortgages. The first if not duly recorded, it says shall not be good against subsequent purchasers, not having notice thereof. The latter, it declares void against subsequent purchasers; omitting the words, " not having notice thereof." Upon the first point, therefore, my opinion is clearly against the Complainant."
The 2d point is, that, Holliday having purchased before the time for recording Rootes's mortgage was out, a subsequent recording could not as to him be necessary, and therefore will not be required. The reasoning in support of this is ingenious. " Why (it is asked) is a Deed required to be recorded? To give notice, and thereby to prevent innocent persons from throwing away their money. But the purchaser has already done this: how therefore will a notice avail him? And will the Court of Equity require a vain thing? Again, it is said, actual notice is as good as recording; but a deed of mortgage, if recorded in eight months, is good against a purchase made before it was recorded. Suppose, then, actual notice be given within eight months, (as is admitted to be the case here,) will it not be equally good against a mesne purchaser?" The reply seems to me to be this: our Statute has declared a mortgage, not recorded within eight months, void against a subsequent purchaser: he, therefore, with his deed, takes the legal estate. This is clear from all the cases before quoted. Sugd. 471, says, " it will occur to the learned reader that, although a prior purchaser would, in a case of this nature," (meaning a case of notice,) be relieved against the subsequent sale, yet the legal estate will be vested in the subsequent purchaser, by force of the Statute." At Law, then, the subsequent purchaser would succeed, however full and complete the notice; (vide Sudg. 498; 4 East 221, Doe v. Luffkin; ) but here Equity interposes upon the ground (as before mentioned) of the fraud committed by the subsequent purchaser, and takes from him his legal advantage. But how will this apply to the present case? In December 1799, Rootes takes a mortgage. In January 1800, Holliday, without notice of his lien, purchases, and takes a Deed which is duly recorded. Rootes permits the eight months to elapse without recording his deed. This gives Holliday the advantage at law. He has the legal title. A Court of Equity is asked, to take it from him, upon what grounds? His purchase was fair, because without notice. But, it is said, he had notice within the eight months. This, however, (as he swears,) was after he had taken his Deed, and made his payments. It could not, therefore, affect his conscience; could raise no equity against him. Nor was it his fault that Rootes permitted the eight months to pass away, without committing his deed to record. It is a maxim of this Court, that, " where Equity is equal, the law must prevail." And has not Holliday equal equity with Rootes? In my mind, he has superior equity; for Rootes has been guilty of gross neglect, crassa negligentia, as the books call it: although he had early and express notice of Holliday's purchase, he slept upon his post, and permitted the eight months to elapse without recording his deed; and he comes now with a very bad grace to ask this Court to take from a fair purchaser the advantage which his own negligence has given him. He should remember the maxim, " vigilantibus et non dormentibus curat lex."
The 3d point is, that, by the delivery of the Deed to Rootes to be acknowledged for record, Holliday's title ceased, and that Rootes's subsequent acknowledgment had no further effect than to revive Welch's title, leaving Holliday without legal right, and the Land still subject to Rootes's claim for the purchase money. Allowing to the surrender of the Deed all the effect claimed for it, I should question very much whether the subsequent acknowledgment would not enure to the benefit of Holliday. This seems so reasonable, that I can not help thinking it must be law; though I have not examined a single authority upon the question; for I can not believe that the surrender of the Deed in this case can have the effect contended for. The authority relied on, is the case of Eppes v. RandolphCall 184, where Judge Pendleton says, " The term re-acknowledgment seems to have produced mistaken ideas in the mind of the Chancellor. He understands it as meaning no more than that Richard the father, on the 21st of March, acknowledged, that he had, on the 20th of September before, sealed and delivered that Deed: a mistake which information from our Clerk would correct. It would be, that, when a man comes into Court to acknowledge a Deed, the question put to him is not, whether he delivered the Deed at the date; but whether he then acknowledges the Indenture to be his act and deed." From this, it would certainly seem to be the Judge's opinion, that an acknowledgment before the Clerk is a re-execution. For the opinions of that venerable and enlightened man, none can feel a more profound respect than I do. I must still, however, be permitted to doubt whether some error has not crept into the above passage. In the first place, the opinion is extra-judicial; for the point before the Court was not of a Deed acknowledged in Court for the purpose of recording; but of a Deed where the bargainor, in pais, calling in witnesses different from those to the original delivery, in their presence again sealed and delivered the Deed, and made them attest this second sealing and delivery, and endorse on the Deed the date thereof. This course, only, has been taken with a view to an actual re-execution; and this was the case before the Court; but an acknowledgment in Court, I can not but think, is merely to furnish evidence to the Clerk of the original sealing and delivery; and I would venture the assertion, that it never has entered into the minds of the parties, (though it is every day's practice,) that, by this transaction, the vendee was divesting himself of his legal estate, and putting it in the vendor's power to convey to him or to any other, or that the vendor was executing (by the acknowledgment,) a Deed to all intents and purposes new, and thereafter to be considered as bearing date from the acknowledgment. But, in the second place, if this point had been directly before the Court, and so decided, it must be considered as over-ruled, by the case of Moore v. the Auditor, 3 H. and M. 232. In that case, two of the Deeds in contest, were executed August 4th 1798, and recorded, on the acknowledgment of the bargainers, April 17th and 18th, 1799. The question was whether they were void as to the creditors, & c., not being recorded according to law; and it was decided by the Court of Chancery, and the decision affirmed by the Court of Appeals, that they were void, because not recorded within the time prescribed by the Act of Assembly. Here then, is a decision that Deeds, recorded on the same day that they were acknowledged by the bargainers, were not recorded within eight months after their sealing and delivery; which could not have been if the acknowledgment was a re-execution, and the Deed to be considered as bearing date from the acknowledgment. But what would it profit the complainant in this case to prove that the acknowledgment of the Deed to Welch was a re-execution; that it must now be considered as a deed of May 14th 1800, and the mesne acts of Welch null and void? If it defeats the legal estate of Holliday, it destroys at the same blow the plaintiff's mortgage; for all the mesne acts of Welch must share the same fact, must stand or fall together.
" But it is said, that, although Rootes's mortgage should be considered void, yet as the land is still in Welch, it ought to be held liable for the purchase money, and, on that ground, the bill sustained. But, surely, this assertion has been hazarded without sufficient reflection. I think there are two insurmountable objections to it: 1st, we know that, in Equity as well as at Law, the allegata and probata must agree; the plaintiff must prove his case. Although he adds a general prayer for relief, that does not authorize the Court to decree for him on a case different from that in his Bill: it only means that all relief, (whether particularly asked or not,) which the Court may think due to the case, shall be given. Now, what is the case made by the plaintiff? It is, simply, and exclusively, a Bill to foreclose a Mortgage: it rests solely on the mortgage. Take this away, and it has no foundation whatever. Can we, then, in the same decree, declare the mortgage void, and yet decree a sale of the land? But, 2dly, it no where appears that the debt, for which the mortgage is given, is the purchase money for the Land which it comprehends. Neither the Bill, nor the mortgage itself, nor any other paper in the cause, that I recollect, states this. It is extremely probable, indeed I feel very little doubt, that this was the fact, from the circumstance of the Deed and Mortgage being on the same day, and both mentioning the sum of twelve hundred pounds as the consideration; but still, there is no positive evidence of the fact; it makes no part of the case; --it is no where put in issue; the defendant is not called on to confess or deny it, and how can we make it the foundation of our decree? I can not conceive."
" Thus, I am of opinion that none of the points made for the complainant can be sustained. In the close of the notes of the complainant's Counsel it is said, that whatever may be the decision on the main point, the plaintiff expects a decree for the amount of the bonds, and the Hampshire and Berkeley property. As to the lands in Hampshire and Berkeley mortgaged by Welch to Holliday, I see no objection to decreeing Rootes the benefit of them; but, if, by bonds, is meant the bonds executed by Holliday to Welch, and by him assigned, that would raise the question, whose Equity is best; Rootes's, or that of the assignees?; a question not made by the original or supplemental bill; and one which we could not properly consider unless the assignees were parties to this suit."
Bill dismissed, as to Holliday, with costs; as to Welch, without costs.
From this Decree; Rootes appealed.
Decree affirmed.
Leigh for the appellant.
Gilmer and Wickham for the appellees.
OPINION
By the Court, the decree was affirmed; but without prejudice to the appellant's right to proceed against the lands mortgaged by Welch to Holliday.