Devine v. Tierney

• Decision Date: 08 July 1942
• Citation: 27 A.2d 134
• Parties: DEVINE v. TIERNEY et al.
• Court: Maine Supreme Court

27 A.2d 134

DEVINE

v. TIERNEY et al.

Supreme Judicial Court of Maine.

July 8, 1942.

[Copyrighted material omitted.]

Appeal from Superior Court, Aroostook County; Herbert T. Powers, Presiding Justice.

Bill in equity by John R. Devine against Katherine R. Tierney and George P. Findlen to redeem certain realty from an equitable mortgage. From a decree dismissing the bill, the plaintiff appeals.

Appeal sustained as to George P. Findlen, and case remanded for entry of decree that bill be sustained, and bill dismissed as to Katherine R. Tierney for want of jurisdiction over her person.

Before STURGIS, C. J., and THAXTER, HUDSON, MANSER, WORSTER, and MURCHIE, JJ.

Francis Barnes, of Fort Fairfield, and George B. Barnes, of Houlton, for plaintiff.

Bernard Archibald, of Houlton, and Melvin P. Roberts, of Fort Fairfield for defendant George P. Findlen.

Bernard Archibald, of Houlton, for defendant Katherine R. Tierney.

STURGIS, Chief Justice.

This is an appeal from a decree dismissing a Bill in Equity to redeem certain lands and buildings situated in Fort Fairfield, Maine, from an equitable mortgage.

On or about December 31, 1923, John R. Devine of Fort Fairfield mortgaged his homestead farm to the Federal Land Bank of Springfield, Massachusetts, and the mortgage not having been paid according to its terms was in due course foreclosed and the statutory period of redemption on August 1, 1937, had expired. On that day he procured the conveyance of the farm to his wife's sister, Katherine R. Tierney of Arlington, Massachusetts, who gave the Federal Land Bank mortgages on account of the purchase price, paid the balance out of moneys of which he contributed a part and orally agreed that he should occupy the farm provided he paid the annual insurance premiums and taxes and installments due on the mortgages and that she would convey the property to him when he repaid her advances.

Pursuant to this agreement, John R. Devine, being then in possession of the farm continued with his family to occupy and operate it, paid the taxes and insurance premiums with reasonable regularity and kept up the installments due on the mortgages but having made no payments to Katherine R. Tierney on account of her advances, on February 17, 1941, without his knowledge or consent, for a valuable and adequate consideration she conveyed the entire property to George P. Findlen, one of the defendants in this cause, who claims title to the premises as a bona fide purchaser without notice.

Under the settled rule in this jurisdiction the transaction between John R. Devine and Katherine R. Tierney constituted an equitable mortgage. Stinchfield v. Milliken, 71 Me. 567; Bradley v. Merrill, 88 Me. 319, 34 A. 160; Norton v. Berry, 120 Me. 536, 115 A. 287; Chase v. West, 121 Me. 165, 168, 116 A. 213. The mortgagor had an equitable right to redeem the premises from the mortgage upon payment of the indebtedness or liability secured. Linnell v. Lyford, 72 Me. 280; Norton v. Berry, supra. And a resulting trust arose by implication of law in his favor. Reed v. Reed, 75 Me. 264; Burleigh v. White, 64 Me. 23; Dudley v. Bachelder, 53 Me. 403. The title of a purchaser of the premises from the equitable mortgagee, if for a valuable consideration, however, could not be defeated by a trust however declared or implied by law unless the purchaser had notice thereof. R.S. c. 87, § 18. If the equitable mortgagee conveyed the property to a bona fide purchaser without notice, although as to him the right of redemption was barred, the mortgagee remained a trustee for any balance of the purchase moneys received in excess of the amount due on the mortgage. Linnell v. Lyford, supra. If the conveyance was to a purchaser with notice he took the property subject to the outstanding equity and it may be redeemed from him. Bradley v. Merrill, supra; 41 Corpus Juris 368 n. 99 and cases cited.

Under the statute the notice which will defeat the title of a purchaser for a valuable consideration is actual notice either of the trust or of facts which would or ought to put him upon inquiry in reference to it. Where an intending purchaser has actual notice of any fact sufficient to put him on inquiry as to the existence of some right or title in conflict with that which he is about to purchase he stands charged with notice of that which inquiry would have revealed by the exercise of ordinary diligence. This, in the judgment of the law, is actual notice inferred or implied as a fact from circumstances and the equivalent of actual notice proved by direct evidence. As to what facts are sufficient to excite inquiry in such a case and charge the purchaser with implied actual notice under the statute there is no hard and fast rule. They must be such facts as would lead a fair and prudent man with ordinary caution to make inquiry. Knapp v. Bailey, 79 Me. 195, 9 A. 122, 1 Am.St.Rep. 295; Bradley v. Merrill, supra.

The facts established by the record compel the inference that the defendant, George P. Findlen, knew that the mortgagor and not his vendor was in possession of and operating the farm which he bought, a fact which alone did not directly prove actual notice of the existence of the outstanding equity or compel inquiry concerning it but, nevertheless, is a circumstance to be considered with others in determining whether inquiry should have been made. Porter v. Sevey, 43 Me. 519, 530. Compare Coleman v. Dunton, 99 Me. 121, 58 A. 430; Hopkins v. McCarthy, 121 Me. 27, 115 A. 513. Along with this we find that the purchaser more than a year before he bought the mortgaged premises when asked by the mortgagor to loan him money was told by him that "everything I have got is in that farm". And without contradiction the mortgagor testified that the purchaser after he bought the farm came to him to see why he didn't vacate and upon being told that it was because of his equity in the property stated that his vendor, the equitable mortgagor, had told him that "the equity was all used up". And finally in the face of this evidence the defendant, George P. Findlen, remained...