Exon v. Dancke

• Decision Date: 27 April 1893
• Citation: 32 P. 1045,24 Or. 110
• Parties: EXON v. DANCKE et al.
• Court: Oregon Supreme Court

32 P. 1045

24 Or. 110

EXON v. DANCKE et al.

Supreme Court of Oregon

April 27, 1893

Appeal from circuit court, Multnomah county; L.B. Stearns, Judge.

Suit by Hannah C. Exon against Michael Dancke and another to declare a deed a mortgage, and for leave to redeem. From a judgment for defendants, complainant appeals. Affirmed.

Caples & Allen, for appellant.

Killin & Thomas and R.S. Strahan, for respondents.

BEAN J.

This is a suit to declare a deed absolute in form a mortgage, and for leave to redeem. The facts are that on April 30, 1885, H.C Carmack, John Kenworthy, C.C. Hall, and John S. Simmons, at the request of John Exon, the husband of plaintiff, borrowed of the First National Bank of East Portland, on their individual note, the sum of $1,050, and delivered the same to Exon, to enable him to pay off and discharge certain indebtedness of his, then due and owing. In order to secure and save them harmless from any loss by reason of having given this note, the plaintiff and her husband made executed, and delivered to them a warranty deed for the premises in controversy, belonging to plaintiff, and upon which there was at the time a mortgage for about $1,200 in favor of one Pearcy, which deed was duly recorded in the records of the proper county. At the time of the execution and delivery of the deed, Carmack, Kenworthy, Hall, and Simmons executed and delivered to John Exon, the husband of plaintiff, a defeasance, or instrument in writing, by the terms of which they agreed that in the event of Exon's paying, or causing to be paid, their said note and interest according to its terms, all taxes assessed on the land, and in all things save them harmless by reason of making the note, they would reconvey the premises to Exon or his assigns, but this defeasance was not recorded. The plaintiff remained in the open, exclusive, and notorious possession of the premises from the date of the deed until the 27th of September, 1886, when, the note to the bank not having been paid, Kenworthy and his associates sold and conveyed the property to the defendant Michael Dancke for the sum of $2,700 in cash,--that being the best sum obtainable therefor,--and which they applied in payment of the note to the bank, the first mortgage on the property, and delivered the surplus to the plaintiff's son, for her use and benefit; and, on the 26th of the following month, Dancke took possession of the property, and has continued to live upon and occupy the same ever since.

Assuming but without deciding, that the conveyance from plaintiff and her husband to Kenworthy and his associates, as between themselves, was a mortgage, and not a conditional deed, we shall proceed to examine the only question we deem material in the case, and that is whether Dancke, at the time of his purchase, had notice of plaintiff's equity. By section 3029, Hill's Ann. Laws, it is provided that "when a deed purports to be an absolute conveyance, in terms, but is made or intended to be made defeasible by force of a deed of defeasance, or other instrument for that purpose, the original conveyance shall not be thereby defeated or affected, as against any person other than the maker of the defeasance, or his heirs or devisees, or persons having actual notice thereof, unless the instrument of defeasance shall have been recorded in the office for the recording of deeds and mortgages of the county where the lands lie." This statute is, in substance, found in many of the states of the Union, and the construction of the term "actual notice," as used therein, has been the subject of much judicial controversy and conflict of opinion; but we do not deem it necessary at this time to indicate our views thereon, but shall assume the true rule to be that notice, within the meaning of the statute, must be held to be actual when the subsequent purchaser has actual knowledge of such facts as would "put a prudent man upon inquiry, which, if prosecuted with ordinary diligence, would lead to actual notice of the right or title in conflict with that which he is about to purchase." Brinkman v. Jones, 44 Wis. 499, which contains an exhaustive and able examination of the question.

From the evidence it appears that at the time Dancke purchased he had actual knowledge that plaintiff was in the open notorious, and exclusive possession of the property; but a careful examination of the record fails to disclose that he had any knowledge or notice of her claim thereto, unless he is chargeable with notice from her possession. He made his contract for the purchase of the property in good faith, with Kenworthy, in whom he had confidence, and who represented to him that the title was good, and that he was authorized to make the sale, but did not disclose the manner in which he and his associates became the owners of the property, or that Mrs. Exon or any other person had any interest therein, or claim thereto, but assured him that the title was good, and that a deed from him and his associates would convey a perfect title. The important question in this case, then, is whether the possession by plaintiff at the time of the purchase by Dancke was sufficient to put him upon inquiry as to her equitable title, or charge him with notice of her claim to the property. As a general rule the authorities declare that open, notorious, and exclusive possession and occupation of real estate by a stranger to the title is sufficient to put a purchaser from a vendor out of possession upon inquiry as to the legal and equitable rights of the party in possession. Stannis v. Nicholson, 2 Or. 332; Bohlman v. Coffin, 4 Or. 313; Petrain v. Kiernan, (Or.) 32 P. 158. But whether this rule applies to a purchaser from a vendee whose vendor remains in possession after having put upon record a deed conveying the title, properly executed, acknowledged, and recorded, the authorities are in conflict. In Pell v. McElroy, 36 Cal. 268, which is a leading case upon the subject, the court discusses the question at length, and arrives at the conclusion that the continued possession of the vendor after the conveyance of the title is a fact in conflict with the legal effect of his deed, and is presumptive evidence that he still retains an interest in the premises, and is sufficient to subject the purchaser to the general rule as to the effect of notice given by possession. As a reason for this conclusion the court says: "An absolute deed divests the grantor, not only of his legal title, but right of possession, and, when such grantor is found in the exclusive possession of the granted premises long after the delivery of his deed, here is a fact antagonistic to the fact and legal effect of the deed; and we cannot appreciate the justice, sound reasoning, or policy of a rule which would authorize a subsequent purchaser, while such fact of possession continues, to give controlling prominence to the fact and legal effect of the deed, in utter disregard of the other notorious,...