Epps v. Mccallum Realty Co

CourtUnited States State Supreme Court of South Carolina
Citation138 S.E. 297
Decision Date19 May 1927
Docket Number(No. 12208.)
PartiesEPPS et al. v. McCALLUM REALTY CO. et al.

138 S.E. 297

EPPS et al.

(No. 12208.)

Supreme Court of South Carolina.

May 19, 1927

[Ed. Note.—For other definitions, see Words Cothran, J., dissenting.

Appeal from Common Pleas Circuit Court of Sumter County; John S. Wilson, Judge.

Action by R. D. Epps and others as trustees against the McCallum Realty Company, Lizzie Rogers, and another. Judgment for defendant last named, and plaintiffs appeal. Reversed and remanded.

The master's report and the decree of Judge Wilson, with exceptions thereto, are as follows:

[138 S.E. 298]

Master's Report.

This is an action to foreclose a mortgage made by McCallum Realty Company to plaintiffs, dated March 25, 1921, to secure its bond, of even date therewith, conditioned for the payment of $700, one, year after date, with interest at the rate of 7 per cent, per annum, payable annually, unpaid interest to bear interest at the same rate. The mortgage described the land as follows:

All that lot of land with the dwelling and improvements thereon, in the state and county aforesaid, fronting 106.3 feet on Cleveland street of said city, and bounded as follows: Northeast by lot No. 2 on said plat hereinafter referred to; southeast by said Cleveland street; and on the west by land of estate of R. C. McFaddin, this lot being designated as Lot No. 1 on plat made by McLellan & Palmer, recorded in Plat Book F-4, at page 166.

The McCallum Realty Company, after the delivery of the bond and mortgage, went into bankruptcy, and W. L. Marshall, trustee in bankruptcy, is made a party, but neither the company nor the trustee has answered.

The defendant Lizzie Rogers answers, denying knowledge of the bond and mortgage, and setting up that long before the execution of the alleged mortgage she entered into an agreement with McCallum Realty Company to purchase the lot" above described, and, under and in pursuance of said agreement, went into possession thereof, and has continuously thereafter been in open, adverse, and notorious possession thereof, claiming her right therein under her agreement with said company, all of which plaintiffs and their predecessors in interest know, or ought to have known; and that whatever rights the plaintiff may have in the premises are subordinate to those of herself; that at the time of making said agreement she paid the seller $100, and has since made all the payments to it on account of the purchase price, in accordance with the contract, except such as were waived by the seller; that from time to time she asked the company for a statement of her account, so that she might pay up in full and obtain a conveyance of the premises; and that she repeatedly offered to pay the balance due, but was put off by the company on one pretense or another, and prevented from making payment of the balance, and the conveyance was not made to her; that she has been at all times ready and willing to pay such balance, and so informed the company many times.

There is no conflicting testimony as to the above allegations of fact by this defendant, and practically no dispute as to the balance due under the contract, which balance will be referred to later herein.

This defendant is, and has been, continuously in possession of the lot described under an unrecorded contract of purchase and sale from a time long antedating plaintiff's mortgage, and the sole question at issue here is whether or not possession by vendee under such contract is constructive notice to subsequent purchasers of incumbrances.

In the case of Graham v. Nesmith, 24 S. C. 285, which arose under a written contract of sale, Chief Justice McIver says: "It is well settled that possession is notice sufficient to put a party upon inquiry, and that is enough. Massey v. McIlwain, 2 Hill, Eq. 421; Sheorn v. Robinson, 22 S. C. 32; Bieman [Biemann] v. White, 23 [S. C.J Id. 490. Finding these plaintiffs in possession, his duty was to inquire of them by what right they claimed to hold the land, and such inquiry would have led to a notice of their equity which they are now seeking to set up."

In the case of Sheorn v. Robinson, referred to in the quotation above, the court says: "In Jones on Mortgages, §, 600, the doctrine on this subject is laid down in general terms as follows: 'Possession by a vendee under a contract of purchase, whether it be personal or by a tenant, is constructive notice of his equitable rights as purchaser, and any one taking a mortgage under such circumstances from his vendor takes subject to his rights.' It is not distinctly stated here whether the knowledge of the fact of possession must be brought home to the subsequent incumbrancer or purchaser, yet it is held that the possession is the foundation of the notice, and therefore, like recording, must operate as constructive notice, whether actually known or not.

* * * So, too, it is an easy matter for a purchaser of land to ascertain at the time of his purchase whether his vendor or some one else is in possession, and if he fails to do so, he should take the consequences. * * * There are two kinds of notice, actual and constructive. Either is sufficient to prevent the plea of bona fide purchase without notice.

* * * That is well understood and such notice is not claimed here. The case turns on constructive notice. An illustration of constructive notice is found in the recording of deeds. As we have said, recording amounts to notice, whether known or unknown, because the means of information are at hand. We think this principle should apply where at the time of the sale the vendor is out of the possession and a third party is in. It is the business of one who buys land, or attempts to secure a lien on land, to know the surroundings. In justice to his own interests, and certainly in justice to the interests of a party who has contracted to buy in advance of his purchase, and who is notoriously in possession, claiming it and using it as his own, he should examine into and ascertain the facts. One in possession under an equitable title has nothing that he can record; and possession, open and unconcealed, is the only mode by which he can give notice to the world of his rights; and when this notice is given in the only way in which it could be given, he should be protected. We think, upon authority and principle, the ruling of the circuit judge was correct."

But plaintiffs contend that the cases cited (and others of the same purport) were decided prior to the enactment of the Act of 1888, which now constitutes sections 5312 and 5313 of 3 S. C. Code, that the contract in this case is an "instrument of writing conveying real estate, " required by section 5312 to be recorded; and that, therefore, under section 5313, possession by vendee is not notice of such instrument; and that plaintiffs, being mortgagees without notice, take precedence of defendants.

Conceding that, in case of an unwritten contract of sale, the authorities quoted govern, and possession may be notice, they maintain that the statute law referred to renders such authorities inapplicable to a written contract.

No case, decided by our court since the

[138 S.E. 299]

passage of the recording act, based on a written contract has been cited, but plaintiffs rely on an inference drawn from opinion by Mr. Justice Woods in the case of Folk v. Brooks, 91 S. C. 9, 74 S. E. 46, which was founded on an unwritten contract. In that case defendants claimed that a deed under which plaintiff's grantors had acquired title had been placed in his hands as security for a loan, and that at the expiration of one year, in ease of default in payment, he was to have title. In that case Justice Woods uses the expression, "When the contract of purchase of land is not written, and therefore not an instrument of writing, required by law to be recorded, this section" (now section 5313) "has no application"; the inference being that, if the contract had been in writing, recording would have been necessary to bar subsequent claimants.

But the opinion does not hold the positive proposition that such written instrument is required to be recorded; and if it did so hold, such statement could be considered as only obiter dictum.

An exhaustive search has brought to light little in the way of direct authorities on the question as to whether a written contract is such an "instrument, " etc., as the recording act requires to be recorded.

The question here is, "Is a written contract of sale an instrument in writing conveying real estate?" If it is, it should be recorded in order to charge subsequent purchasers or incumbrancers with notice. If it is not such an instrument, this case is governed by the rule stated in the cases cited above, and possession is notice of the rights of the defendant Rogers.

The two sections of the recording act referred to are in part as follows:

Section 5313 provides that "no possession of real property described in any instrument of writing required by law to be recorded shall operate as notice of such instrument, " etc.

Section 5312 required the recording of "all deeds of trusts or instruments in writing, conveying either real or personal estate, and creating a trust or trusts in regard to such property, or charging or incumbering the same."

The legal meaning of the word "conveying" must therefore be determined; but, as that participle is not separately defined, we must derive its meaning from the verb "convey" and the noun "conveyance, " and these words are defined as follows:

Conveyance: "The meaning of this word being well understood at common law, it must be understood in the same sense when used in a statute." 9 Cyc. S60, note 21—citing Kelly v. Fleming, 113 N. C. 133, 18 S. E. 81.

"At common law the term conveyance has been defined to mean an instrument in writing by which property or title to property is conveyed or transmitted from one person to another; a sale, or transfer, " etc. 9 Cyc. 860.

Conveyance "is the transfer of the title to land by one or more persons to...

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    ...and anno. at page 430. Both the deed and its record were nullities. Scheer v. Stolz, infra; Meley v. Collins, infra; Epps v. McCallum Realty Co., 139 S.C. 481, 138 S.E. 297; Stone v. French et al., infra; 16 Am. Jur. “Deeds” Sec. 21. See also the following cases, in each of which it was hel......
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