Armstrong v. Carwile

• Decision Date: 03 March 1900
• Citation: 35 S.E. 196,56 S.C. 463
• Parties: ARMSTRONG v. CARWILE et al.
• Court: South Carolina Supreme Court

35 S.E. 196

56 S.C. 463

ARMSTRONG

v.CARWILE et al.

Supreme Court of South Carolina.

March 3, 1900.

MORTGAGES—PRIORITIES—JUDGMENT CREDITOR—PAROL, EVIDENCE—BILLS AND NOTES-JUDICIAL SALES—BONA FIDE PURCHASER— DEFENSES—LIS PENDENS—FILING OF IN ACTION NOT AFFECTING REAL ESTATE.

1. Rev. St. 1893, § 1968, declares that mortgages not recorded within 40 days after their execution shall be void as against subsequent creditors of the mortgagor without notice, and, if not recorded within such time, shall be valid only from the date of record. Held, that a creditor whose claim accrued before the execution of a mortgage by the debtor was not a subsequent creditor within such statute, and hence his claim was not entitled to priority over a mortgage subsequently issued, though it was not recorded for more than 40 days after its execution.

2. Parol evidence is admissible to show when the debt for which a note was given originated.

3. A purchaser at execution sale cannot maintain the defense of a purchaser for valuable consideration without notice of a mortgage on the property, where such mortgage was of record, although it was recorded subsequent to the commencement of the action in which the sale was ordered.

4. The filing of a lis pendens against the property of a defendant in an ordinary action on a money demand, which in no way affects the title to real estate, is ineffective for any purpose, since Code Civ. Proc. § 153, authorizes the filing of lis pendens only when the action affects real estate.

Appeal from common pleas circuit court of Greenwood county; G. W. Gage, Judge.

Action by Patrick Armstrong, as administrator of John F. Armstrong, deceased, against Zachariah W. Carwile, Jr., and another. Judgment for plaintiff, and defendants appeal. Affirmed.

The decree of the trial court was as follows:

"This is an action to foreclose a mortgage. The cause was referred to the master to take the testimony, and report the same, together with his findings of law and fact on the issues raised. The report is in, and the cause now comes before me on exceptions thereto by the plaintiff. The defendants do not except. The exceptions are sixteen in number, but they all refer to one issue. The mortgage sued on was executed on 5th July, 1892, by the defendant Carwile to Daniel & Co. It was not recorded until 10th December, 1892. It was assigned to the plaintiff 12th January, 1894. There is now due on it between seven and eight hundred dollars. On 8th December, 1892, one Clara L Withers commenced suit against Carwile in the common pleas at Abbeville. The summons was on that day personally served on Carwile, and on that day the land in dispute was attached. Both Withers and Carwile were residents of Augusta, and so was the plaintiff and his assignors. Notice of lis pendens was filed by Withers in that action on 7th December, 1892, and therein it was stated that the land in dispute was attached. Thereafter, on 17th February, 1S93, judgment was entered by Withers against Carwile for $5,122.89 and costs. Execution was issued, and sale had by the sheriff sales day in November, 1897. At that sale the defendant Taylor became the purchaser, and took a deed from the sheriff. The subject of the action in Withers v. Carwile was a note dated 5th December, 1892, for $4,600, due on demand, 'for value received, ' executed by Carwile to Withers. On the trial before the master it was admitted, if certain witnesses for plaintiff were present, they would swear the consideration for the note passed before the date of the execution of the mortgage. Indeed, that fact is not contested. The testimony tending to prove it was excluded by the master upon two grounds, to wit: Because such testimony would vary the terms of the note; because such testimony would constitute an attack on a judgment in an action collateral to the record in that case. The master found as matter of law that Taylor had a good title to the land, discharged from any lien or interest of the plaintiff, and dismissed the complaint. The exceptions are directed to the rulings and findings of the master above recited. To sustain the master's conclusions, defendants relied, in argument, on the provisions of section 153 of the Code of Civil Procedure, with reference to the limitations of the rights of persons whose incumbrance is recorded subsequent to the filing of lis pendens. That section provides: 'Every person whose * * » encumbrance is subsequently * * * recorded shall be deemed a subsequent * * * encumbrancer, and shall be bound by all proceedings taken after the filing of such notice to the same extent as if he were made a party to the action, ' In the case of Withers v. Carwile, which was an ordinary suit against a nonresident on a note, attachment was levied on the land, and lis pendens was filed, describing the land. The plaintiff's mortgage was recorded after the filing of the notice of lis pendens. Was the purpose of the Code to make, by construction, the holder of the mortgage a party to the suit on the note, and have his rights adjudicated in that cause? That is defendants' contention. Section 153 of the Code does provide that notice of lis pendens may be filed 'whenever a warrant of attachment under sections 248-264 of this Code of Procedure shall be issued, ' but itmanifestly had reference to 'any action arising for the recovery of * * * [real] property, ' and not to actions 'for the recovery of money.' The two sections (153, 24S) must be read together when they refer to one matter common to both, to wit, an action to recover land, or, what is the same thing, an action where title to land comes into controversy. But. if the holder of the mortgage was a constructive party to the action of Withers v. Carwile, and the mortgage debt was adjudicated therein, then the matter is res judicata. That matter is a defense to be pleaded. I do not think the answer advertises plaintiff of such a plea. It does plead the judgment for certain manifest purposes, but it does not do so in a way to notify him his rights have heretofore been finally settled in a suit to which he was a party. Nor did the master pass on the issue, and I would not be bound to do so in the absence of an exception to the master's report. Code, § 294. The consideration of the interesting question raised by the argument, though thus by the rules of legal construction put beyond my reach, has been passed on, so that all the Issues may be decided.

"The other issue made is that of a bona fide purchaser for value and without notice, and that defense involves an application of the statute regulating the registration of legal instruments. The contest here is betwixt whom? A party on the one hand whose mortgage was recorded subsequent to the expiration of forty days after its execution, and a party on the other hand who, subsequent to the record of the mortgage, purchased (at the hands of the sheriff) from the mortgagor. The purchaser paid value at the time of purchase. He bought in good faith. There is no proof of actual notice. Did be have constructive notice? If he did, he is 'affected.' The proviso of section 1968, Rev. St. 1893, answers the question, to wit: 'That [the mortgage] if recorded subsequent to the expiration of 40 days, shall be valid to effect the rights of subsequent purchasers for valuable consideration without notice, only from the date of such record.' Stated in positive form, it declares a mortgage recorded after the expiration of 40 days shall be valid against a purchaser of the land who bought after record. At the time the defendant Taylor purchased, the mortgage was spread on the record, and had been, there for seven years next before. He had notice. It is manifest, therefore, the defendant, as subsequent purchaser from Carwile, is not within the protection of the statute in his own merit. Is he under its protection by virtue of the merit of a subsequent creditor of Carwile? The rights of subsequent creditors are guarantied by the statute, and, to protect them, their sales must be sustained. The ostensible subsequent creditor was Clara L. Withers. If her debt was contracted subsequent to the execution of the mortgage, and she sold the land under judicial process to collect it, the purchaser at that sale took unin cumbered title to protect her rights, not his. So that the contest now is betwixt whom? A party on the one hand whose mortgage was recorded subsequent to the expiration of 40 days after its execution, and a party on the other hand who was a creditor of the mortgagor when the mortgage was made. The statute does not protect subsisting creditors, and as to them the mortgage need never be recorded. But one of the issues is the status of the Withers debt. Was it subsisting on 5th July, 1892, or was it contracted subsequent thereto? The debt was not created by the judgment, or by the attachment lien theretofore, or by the note dated 5th December, 1892. The note evidenced the debt, the attachment evidenced the beginning of the lien to secure its payment, the judgment evidenced the final determination by the court of the rights of the parties before it. It is of the essence of the question to ascertain when the debt was made. The defendants do not deny as a fact that the debt was made before the 5th July, 1892; but they contend that the proof of the fact varies the written note, and collaterally attacks the judgment. The proof was tendered and rejected by the master. Manifestly, if the note declared when the debt was contracted, or if the judgment found that fact, parol testimony would be incompetent to prove the contrary. But the time when the debt was contracted is not fixed by the terms of the note, nor is it found by the judgment, expressly or by implication. The true fact may, therefore, be shown by parol. Such testimony proves the debt was contracted before the mortgage was made. The rights of the creditor. Withers, then, are no more within the protection of the statute than are the rights of the...