Craig v. Osborn

• Decision Date: 31 December 1923
• Docket Number: 23608
• Citation: 134 Miss. 323,98 So. 598
• Court: Mississippi Supreme Court
• Parties: CRAIG et al. v. OSBORN et al

98 So. 598

134 Miss. 323

CRAIG et al. v. OSBORN et al

No. 23608

Supreme Court of Mississippi

December 31, 1923

Suggestion of Error Overruled Feb. 4, 1924.

APPEAL from chancery court of Leflore county, HON. C. L. LOMAX Chancellor.

Suit by W. L. Craig and another, trustees, against S. I. Osborn trustee, and another. From a judgment sustaining a demurrer to the bill, plaintiff appeals. Reversed and remanded.

Judgment reversed and cause remanded.

Pollard & Hamner, for appellants.

This appeal grows out of the construction of the Recording Act by the chancellor. Harry Hosmer executed a deed of trust to G. P. Elliott. Elliott withheld it from the record from the 10th day of January, 1918, until the 9th day of June, 1919. On the second day of June, 1919, without any knowledge of the outstanding deed of trust from the said Harry Hosmer to G. P. Elliott, and before Elliott's deed of trust was recorded, W. L. Craig loaned to the said Harry Hosmer one thousand five hundred dollars in money, on the same security which was held by Elliott. Elliott's deed of trust was filed for record on the 9th day of June, and Craig's deed of trust was filed for record on the 13th day of June.

The chancellor held that in order to occupy the position of a bona-fide purchaser for value without notice, Craig was required under the law to get his deed of trust on record first. We contend that the chancellor erred in thus construing the law. The practice of recording conveyances was unknown to the common law, and, therefore, as between conflicting conveyances from the same source, the one which was prior in time was prior in right. At an early date, however, to obviate fraud arising out of secret conveyances, statutes were enacted in the several jurisdictions requiring the registration of conveyances in order to render them valid as against subsequent bona-fide purchasers. The language of these statutes varies to such an extent that it is necessary to keep in mind the provision of the particular statute in order to catch the reasoning in a particular case.

We have found the most complete annotation which it has been our privilege to examine in the note to McGregor v. Putney, 75 N.H. 113, 71 A. 226, in Am. Anno. Cases 1912-A 193.

There are three sections in the Mississippi Code pertaining to the recordation of instruments: Section 2288 (2784), Hemingway's Code; Section 2291 (2787), Hemingway's Code; Section 2292 (2788), Hemingway's Code. Neither of these sections of the Code provides or requires that the subsequent purchaser for a valuable consideration without notice shall record his conveyance in order to give it effect against a prior conveyance of which he had no notice, actual or constructive. Our contention is that a subsequent purchaser for a valuable consideration without notice does not have to get his conveyance on record in order to be protected against a prior unrecorded deed of trust of which he had no knowledge or means of knowledge.

Our contention is that Elliott's deed of trust did not take effect as to Craig until it was lodged with the clerk on the 9th day of June, 1919, and that before Elliott's deed of trust took effect Craig had already, in good faith, paid out his money on a subsequent mortgage, and that it was not necessary for Craig to file his deed of trust in order to be a bona-fide purchaser for value, without notice, and entitled to protection as against Elliott's unrecorded deed of trust.

It has been universally held by the supreme court of a number of our sister states that unless the statute required a subsequent encumbrancer to first file his deed of trust it was not necessary for him to do so in order to be protected by the statute. Steiner v. Clisby, 95 Ala. 91, 10 So. 240, and 11 So. 294; Coaster v. Georgia Bank, 24 Ala. 37; Brown v. Nelms, 6 Ark. 368, 112 S.W. 373; West Coast Lumber Company v. Griffin, 56 Fla. 873, 48 So. 36; McQuire v. Baker, 61 Ga. 339; Schaeffer v. Fithian, 17 Ind. 463; Turpin v. Sudduth, 53 S.C. 295; Ranney v. Hogan, 1 Tex. Unrep. Cas. 253; Swanstron v. Washington Trust Company, 41 Wash. 561, 83 P. 112. (In this case the court quoted with approval from 24 Am. and Eng. Enc. of Law (2 Ed.), 140.) Sallass v. Pierce, 30 Wis. 443.

Our statute is silent concerning the recording of the later instrument. The prior instrument is void until filed, and takes effect from the date of filing. The exact point involved in this case has not been passed on by our court, but our court has, however, announced plainly the protection given to a creditor as against the holder of a prior conveyance which has not yet been recorded, and we can see no real difference between the position of a bona-fide purchaser for value, without notice, and that of a creditor. Claiborne v. Holmes, 51 Miss. 146; Humphrey v. Merrill, 52 Miss. 92; Myers v. Buchanan, 46 Miss. 406; Duke v. Clark, 58 Miss. 465; Miss. Val. Co. v. Chicago, etc., R. Co., 58 Miss. 846; Louridge & Bogan v. Jno. Rowland, 52 Miss. 546.

The case of Leonard Pomet v. A. Scranton et al., reported in Walker's Reports, 406, is practically the same proposition as presented to the court in the present case. See, also, 23 R. C. L. 232; 27 Cyc., 1214. Craig occupies the position of a purchaser, and if he did not occupy that position the trustee in the deed of trust securing his indebtedness is joined herein as one of the complainants, and in the prayer for general relief.

Recording an instrument does not cut off the equities as between the parties. The thing that governs the equities is notice. Craig had no notice. Our statute does not require the subsequent mortgagee or lienholder to first record his security before he is entitled to its protection, and we do not believe that the court will engraft such a provision on the statute.

Osborn & Witty, for appellees.

So far as we have been able to ascertain, appellant's counsel is the first in this state to contend that a junior mortgage should have priority over a senior mortgage first recorded. There are many reported cases in which a junior mortgage has been held to have priority over another mortgage bearing prior date, and filed for record subsequent to the recordation of the junior mortgage. In those cases the holder of the senior mortgage so far as date is concerned, has contended that he should be accorded priority even though a junior mortgage was first filed for record. Of course the courts have held uniformly in such cases that the junior mortgage had priority because it was first filed for record.

The cases relied upon by appellant are not in point since each rests on the statute of its particular state. We submit that none of the Mississippi cases relied upon by appellant have any bearing whatever, because the facts are in no way similar to the facts in the case at bar. In all the Mississippi cases cited, the statement frequently occurs that the filing of the deed after the rendition of the judgment, or after the attachment had been executed on the land did not have the effect of giving the deed priority. In other words, it had no relation back, but the deed took effect only from the time it was filed for record as against these liens previously acquired and of record at the time the deed was filed for record. Instead of being authorities for appellant we think these cases are authorities for appellee.

A most careful examination of all the cases from the courts of other states discloses only one court which apparently holds squarely with the contention of appellant. These cases come from the state of Washington. On the other hand there are numbers of cases from other courts which place the same construction upon statutes similar to ours as that contended for by appellee. The Illinois statute is practically identical with our own, and was construed by the supreme court of Illinois in West Chicago Street Railway Co. v. Morrison (Ill.), 43 N.E. 393.

The Tennessee court, in construing a statute identical with our own, has on several occasions held that the only way a subsequent purchaser can have priority as against a deed bearing prior date, in the absence of actual notice, is to first file his instrument for record. See Copeland & Park v. Bennett & Park, 10 Yerger, 355; Whiteside v. Watkins, 58 S.W. 1107. In the recent case of McHan v. Dorsey, 92 S.E. 598, the North Carolina court had its statute under consideration.

The textwriters are in accord. 1 Jones on Mortgages, 674; 27 Cyc. 1192 to 1194, inclusive; 19 R. C. L. 408.

If appellant should prevail in his construction of our Registry Act, greatest confusion and disorder will immediately follow. Business will be injuriously affected to an extent disagreeable to contemplate. If appellant prevails the Recording Statute means nothing. We contend that a man becomes a subsequent purchaser for value, within the meaning of the statute only when he files his instrument for record. We argue that the registry law should mean something to a man when he examines the records, finds them clear, and files his instrument for record; that the risk he runs in having a lien to some other party put of record before he gets his of record is quite enough of a burden to put on him; but when he does get his instrument of record without notice of any other outstanding unrecorded instrument, he ought to be entitled to a consciousness that he has done all the law requires of him, and is entitled to its protection.

Argued orally by R. V. Pollard, for appellants, and S. I. Osborn, for appellees.

ETHRIDGE, J. SYKES and COOK, JJ., dissent.

OPINION

ETHRIDGE, J.

The appellants filed a bill in the chancery court alleging that S. I. Osborn, as substituted trustee, foreclosed a deed of trust executed by one Harry Hosmer to secure an indebtedness due to L. G. Malone, which...