Jennings v. Lentz

• Decision Date: 21 January 1908
• Citation: 50 Or. 483,93 P. 327
• Parties: JENNINGS et al. v. LENTZ.
• Court: Oregon Supreme Court

93 P. 327

50 Or. 483

JENNINGS et al. v. LENTZ.

Supreme Court of Oregon

January 21, 1908

Appeal from Circuit Court, Baker County; William Smith, Judge.

Suit by Martha J. Jennings and others against William Lentz. From a decree for complainants, defendant appeals. Affirmed.

W.L. Patterson, for appellant.

C.P Murphy, for respondents.

KING C.

This is a suit to remove a cloud upon the title to 160 acres of land in Baker county, and is brought here on an appeal from a decree of the circuit court in favor of plaintiffs. On and prior to April 23, 1902, the land was owned and in the actual possession of Frank Lentz. On the date named in consideration of $500, one half of which was paid in cash and the balance by a note due one year after date, secured by a mortgage on the property, he executed a warranty deed to the premises to Robert Duvall, who, within an hour after receipt of the conveyance, and without entering into possession, executed a like deed therefor to Mary E. Gardner who had furnished the money for the purchase, and for whom, without the grantor's knowledge, Duvall was acting as agent in the purchase from Lentz. On the same day that the deed to Duvall was executed Lentz recorded his mortgage in the proper records of that county, and soon thereafter removed from the land, leaving no one in possession, and, so far as manifested by the evidence, no one was in actual possession of the land when this suit was filed. The deed to Gardner was given subject to the Lentz mortgage, which with the deed from Lentz to Duvall was left by Mrs. Gardner with M.S. Hughes, who was to take them to the clerk's office for record; but for some unexplained reason they were not recorded until 30 days later. On October 3, 1903, Mrs. Gardner, by warranty deed and for a valuable consideration, transferred the property to plaintiffs' grantors, who, by like deed, conveyed it to plaintiffs. Shortly after Frank Lentz had deeded the property to Duvall he informed the defendant of the transfer, to whom it appears Duvall was indebted in the sum of $145, which indebtedness was incurred some time prior to the transfer of the property by Lentz. Defendant then had his attorneys examine the records of the county for the purpose of ascertaining if the debtor still owned the property, which resulted in their finding a record of the mortgage on the property from him to Frank Lentz, but the record title to the land in the mortgagee. Without further information than the statement by Frank Lentz to the effect that on April 23d he had conveyed the land to Duvall, and the record of the mortgage named, the defendant, on May 7, 1902, caused the land to be attached in an action filed against Duvall on the $145 claim, in which proceeding judgment was obtained, execution issued thereon, and the property sold to satisfy the judgment, which property was purchased by defendant, he receiving a sheriff's deed therefor, through which he here claims title.

There is no controversy as to the facts, leaving for adjudication the question as to which has the better title under the facts as stated. Our statute provides that any real property of the debtor not exempt from execution shall be liable to attachment, which shall be attached by the sheriff making a certificate containing the title of the cause, names of the parties, and description of the realty, with a statement showing the property to have been attached, and filing the same with the clerk of the county in which the property is situated; that from the date thereof until discharged, or writ executed, the plaintiff, as against third persons, shall be deemed a purchaser in good faith for a valuable consideration; that his rights as such shall attach immediately upon the filing of such certificate; and that every conveyance of real property within this state which shall not be recorded within five days after the execution thereof shall be void as against any subsequent purchaser in good faith for a valuable consideration, whose conveyance thereof shall be first duly recorded. B. & C. Comp. §§ 300-303, 5359.

In order, therefore, to determine whether defendant's title is superior to that of plaintiffs, it is necessary to ascertain only whether, in lieu of the course pursued, he would have been a purchaser in good faith, if with the limited knowledge of the status of Duvall's title at the time of the levy defendant had purchased the property from him and paid a valuable consideration therefor. If answered in the affirmative, he has the better title and must prevail; otherwise plaintiffs have the superior title, and are entitled to the relief demanded. Under the law as it existed prior to the adoption of the statute mentioned, to the effect that after the filing of the attachment proceedings the creditor shall be deemed a purchaser in good faith, the creditor, by virtue of his attachment, acquired a lien only on the actual interest which the debtor had in the property. Riddle v. Miller, 19 Or. 468, 23 P. 807. It is obvious that the statute on this point was intended to modify this rule, and to give the attaching creditor, regardless of the actual condition of the debtor's title, additional protection by placing him in the same position as a bona fide purchaser for value, in case of failure on the part of the real owner to observe the requirements of the recording acts. But, in construing these acts, it has been repeatedly held, and has become a settled rule in this state, that an attaching creditor, although placed on an equality with a purchaser by this statute, cannot insist on any greater protection than would be granted to such purchaser; and, in suits in equity, the claim of a bona fide purchaser for value is an affirmative defense, which must be pleaded, thereby placing the burden of proof in such cases upon the party relying thereon. Weber v. Rothchild, 15 Or. 385, 15 P. 650, 3 Am.St.Rep. 162; Wood v. Rayburn, 18 Or. 3, 22 P. 521; Rhodes v. McGarry et al., 19 Or. 222, 23 P. 971; Marks et al. v. Miller, 21 Or. 317, 28 P. 14, 14 L.R.A. 190; Simpkins v. Windsor, 21 Or. 382, 28 P. 72; Dimmick v. Rosenfeld, 34 Or. 101, 55 P. 100; Flegel v. Koss, 47 Or. 366, 83 P. 847; Haines v. Connell, 48 Or. 469, 87 P. 265; 88 P. 872. In discussing this feature, Mr. Chief Justice Thayer, in Rhodes v. McGarry, supra, observes: "It seems to me that, notwithstanding the language of the Code above set out, an attaching creditor, in order to be deemed a purchaser in good faith of the property as against one having an outstanding equity, must allege and prove all the facts necessary to establish that character of ownership in favor of a purchaser of such property as against such an equity. It can hardly be supposed that the Legislature intended, by the provision of the Code referred to, to place an attaching creditor upon any more favorable grounds, with reference to his rights in the property attached, than those occupied by a purchaser of the property; nor to deem the former a purchaser in good faith, except under the same circumstances in which the latter would be deemed such a purchaser. Any other view would lead to absurd consequences, and occasion injustice. It would enable a party to cut off an outstanding equity by resorting to an attachment when he would not be able to accomplish it by a direct purchase of the property. Such a result was obviously not contemplated by the adoption of the said provision of the Code." As the answer is sufficient to bring the defendant's position within the rule announced, it becomes necessary to determine whether this plea is sufficiently supported by the evidence to entitle defendant to be deemed a purchaser in good faith. Words & Phrases (vol. 4, p. 3117) defines "good faith" as being "an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of law, together with an absence of all information or belief of facts which would render the transaction unconscientious." And the rule is that "a want of that caution and diligence which an honest man of ordinary prudence is accustomed to exercise in making purchases is, in judgment of law, a want of good faith" (Id., vol. 4, p. 3117); and whatever is sufficient to put a subsequent purchaser on inquiry must be considered legal notice to him of those rights, and when the purchaser omits to observe that ordinary precaution he must be charged with a knowledge of all facts he might have learned by the exercise of reasonable diligence in making inquiry as to matters to which his attention had been directed. Dembitz, Land Titles, §§ 132, 133; Bent v. Coleman et al., 89 Ill. 364; Citizens' Nat. Bank v. Dayton, 116 Ill. 257, 4 N.E. 492; Pringle v. Phillips, 5 Sandf. (N.Y.Sup.Ct.) 165.

The precise question, as here presented, is before this court for the first time, and we are referred to no case in which the point under a similar state of facts as here disclosed has been distinctly passed upon, nor have we found one, but an application of the principles stated are decisive of the issues presented. The result hinges upon the sufficiency of the inquiry made in reference to the debtor's rights in the premises. In this connection it is urged that the mortgage from the debtor to his grantor, being of record when considered with the grantor's statement to the creditor to the effect that he had conveyed the property to the debtor on a prior date, without further inquiry, constituted sufficient evidence of the debtor's ownership therein to justify the attachment. It will be remembered, however, that the record at the same time disclosed the title to the property to be in Frank Lentz. When therefore, it is made to appear from the record that the title is in a person other than the debtor, the record of a...