Burgess v. Bragaw

• Decision Date: 05 May 1892
• Citation: 49 Minn. 462,52 N.W. 45
• Parties: BURGESS v BRAGAW.
• Court: Minnesota Supreme Court

49 Minn. 462

52 N.W. 45

BURGESSvBRAGAW.

Supreme Court of Minnesota.

May 5, 1892.

(Syllabus by the Court.)

1. A note held to be, in effect, an accommodation note, and to have a consideration from the time of its transfer, pursuant to the intention with which it was made.

2. Rule that where one of two innocent persons must suffer by the fraudulent act of a third, he by whose act the third person was enabled to perpetrate the fraud must bear the loss, applied.

Appeal from district court, Ramsey county; KERR, Judge.

Action by James L. Burgess against Abraham Bragaw. From a judgment for defendant, plaintiff appeals. Affirmed.

William G. White, for appellant.

Davis, Kellogg & Severance, for respondent.

GILFILLAN, C. J.

The plaintiff claims an interest in the real estate through an unrecorded contract in writing, dated May 7, 1887, between one Hurd, the plaintiff, the two Bushnells, and others, by the terms of which the title to this real estate, purchased by the parties to it, was to be taken, for convenience, in the name of Hurd, who was to hold it in trust for the respective parties, and convey it, when sold by the Bushnells, the profits of the business to be divided between the parties. The title was taken in the name of Hurd. February 21, 1889, he conveyed to the Bushnells. September 1, 1891, they conveyed to one Bucknell. September 2, 1891, he executed to them his note and mortgage on the real estate for $5,000. September 26, 1891, the Bushnells sold and assigned the note and mortgage to the defendant. The several conveyances and the mortgage and the assignment of it were all duly recorded. The defendant's claim rests on the mortgage and assignment, and it is clear enough that under the registry laws it takes precedence of plaintiff's interest, resting on the unrecorded contract with Hurd and the others, if the defendant stand, in respect to the mortgage and its assignment to him, in the position of a purchaser in good faith and for a valuable consideration. The allegation in the answer, that he paid the full amount of the mortgage without notice or knowledge of the unrecorded contract at the time he purchased, brings him within the protection of the statute. Without some notice to suggest the existence of such a contract, it was not his duty to make inquiry in respect to it of any one. In order to make it bad faith in one about to acquire an interest in real estate to do so without inquiring beyond the record, he must at least have notice from the record or otherwise of some fact which suggests an interest in some person other than as shown by the record. But plaintiff claims, upon a ground not involving the operation of the registry law, that the mortgage and assignment are void, or that there is a defense against them that he can avail himself of. That law does not make valid a void instrument. It merely gives instruments preference for whatever they are worth, according to the dates of their records. A void instrument is no better because...