Pierson v. Bill

• Decision Date: 06 July 1938
• Citation: 182 So. 631,133 Fla. 81
• Parties: PIERSON v. Bill
• Court: Florida Supreme Court

182 So. 631

133 Fla. 81

PIERSON v. Bill

Florida Supreme Court

July 6, 1938

Suit by the Union Trust Company, for which Nathan D. Bill was subsequently substituted as complainant, and others, against Suzanne Pierson, a feme sole, to declare a mortgage void as against plaintiff's title to mortgaged property. From a decree dismissing defendant's amended counterclaim and declaring the mortgage void, defendant appeals.

Reversed and remanded. Appeal from Circuit Court, Palm Beach County; C E. Chillingworth, judge.

COUNSEL

A Melrose Lamar, of Fort Valley, Ga., and Paty, Warwick &amp Mooney, of West Palm Beach, for appellant.

Williamson, Cain & Baugher, of West Palm Beach, for appellees.

OPINION

BUFORD Justice.

The appeal brings for review a final decree dismissing the amended counter claim of the defendant in the court below, appellant here, and decreeing that a certain mortgage dated October 13, 1925, and recorded on January 13, 1934, in the public records of Palm Beach County, Florida, in Mortgage Book 244, page 274, be declared void as against the title of the plaintiff, the appellee here.

The record shows the following salient facts:

On September 12, 1925, Suzanne Pierson and her then husband, J. Fred Pierson, conveyed the lands involved to Frederick Foster Carey. This deed was recorded on October 22, 1925. On October 13, 1925, Frederick Foster Carey executed a mortgage on the same property securing $24,000 balance of purchase price to Suzanne Pierson. This mortgage was not recorded until January 13, 1934.

On July 12, 1927, Frederick Foster Carey and his wife executed deed without warranty conveying the same property to William A. Alcock, which deed was recorded July 18, 1927. On July 14, 1927, Alcock executed deed without warranty conveying the same property to A. Madeleine Carey.

The record shows that Alcock was used simply as a conduit to convey the title without consideration from Frederick Foster Carey to his wife A. Madeleine Carey.

On March 12, 1928, A. Madeleine Carey and her husband executed a mortgage to one A. W. McMillan to secure a non-negotiable note in the sum of $25,000 and, contemporaneously therewith, the mortgagors executed a collateral note which was negotiable but without security. On March 29, 1929, McMillan assigned the mortgage and transferred the collateral note to Central Farmers Trust Company. The assignment was recorded August 27, 1929.

The record shows that McMillan was an employee of Central Farmers Trust Company and, while he took the assignment, he took it for the benefit of Central Farmers Trust Company.

On February 15, 1930, A. Madeleine Carey and her husband executed mortgage to secure $25,000 to Harry T. Shriver. This mortgage was recorded February 17, 1930. There are certain delineations from the original mortgage by striking same out with pen and ink and the record shows that these delineations were made before delivery of the mortgage.

On June 16, 1933, ancillary letters testamentary upon the estate of Frederick Foster Carey were issued by the County Judge of Palm Beach County.

On October 4, 1933, proof of claim of Suzanne Pierson by her attorneys was filed in the County Judge's Court of Palm Beach County, Florida, against the estate of Frederick Foster Carey based upon purchase money notes made by the deceased to the claimant October 13, 1925. The claim filed shows the following:

'That your deponent accepted a mortgage from Frederick Foster Carey in the sum of $24,000, dated October 13th, 1925, on lots numbered 484, 486, 488, 490 and 492, in the addition known as Poinciana Park, Second Edition to Palm Beach, Palm Beach County, Florida, to secure said notes. Said Carey agreed to record said mortgage at his, Carey's, expense, but said mortgage was never recorded, although Carey represented that it had been filed. Suzanne Pierson.'

On November 17, 1933, Shriver began foreclosure proceedings on the $25,000 mortgage, supra. On November 28, 1933, Central Farmers Trust Company, assignee, filed foreclosure suit against A. Madeleine Carey on the other $25,000 mortgage, supra.

On January 2, 1934, A. Madeleine Carey, widow, executed to Robert E. McNeill, Jr., a deed without warranty, expressly subject to the mortgages to Central Farmers Trust Company as assignee and to Shriver and to the outstanding tax liens and assessment. This deed embraced other land and personal property not involved in this suit. Following the habendum clause, there is a paragraph which reads:

'It is mutually understood and agreed that the grantee herein expressly neither assumes nor agrees to pay the above described mortgages, taxes and assessment, it being the intention of both parties to this conveyance that the grantee herein is simply purchasing the equity of the grantor herein in the above described real and personal property.'

On January 4, 1934, Mrs. Carey's attorney presented the deed above referred to to Mr. McNeill's attorney. The deed was objected to by McNeill's attorney because of its unusual form and the absence of a general warranty, but was accepted when a title insurance agent, after inspecting same, agreed to insure the title.

On January 8, 1934, the foreclosure suits above mentioned were dismissed on complainants' motions.

On January 10, 1934, McNeill conveyed the land by special warranty deed to Union Trust Company of Springfield, Mass.

On January 11, 1934, the Shriver Mortgage was released to Robert E. McNeill, Jr., the release being dated December 15, 1933, and Central Farmers Trust Company satisfied its mortgage under date of January 8, 1934.

The record shows that McNeill took title as Trustee for the appellee Bill and made the conveyance to Union Trust Company of Springfield, Mass. at Bill's direction and Union Trust Company held such title as it acquired as Trustee for Bill. When these facts came into the record Bill was substituted as complainant in lieu of the original complainant, Union Trust Company.

Final decree required Union Trust Company to convey title to Bill.

The disposition of this case turns upon the question as to whether or not the deed from Mrs. Carey to Mr. McNeill constituted such a conveyance of title as would defeat the unrecorded mortgage held by Suzanne Pierson, or whether or not the recitals in the deed were sufficient to put McNeill, who was acting as agent for Bill, on notice and inquiry as to infirmities of title in Mrs. Carey or as to incumbrances, which inquiry, if pursued, would have resulted in the discovery of the Pierson mortgage. There is no question involved here as to the effect of the deed as between Mrs. Carey and Mr. McNeill.

We must hold that the clause contained in the deed, supra, was sufficient to put the vendee on notice and inquiry. The deed on its face in effect said, that the vendor can convey only an equity in the property and proposed to convey her equity and her equity alone in that property.

The record shows that Mrs. Carey at the time of the execution of that deed was cognizant of the fact that the $24,000 mortgage held by Suzanne Pierson was outstanding, unpaid and unsatisfied. It also shows that her attorney who negotiated the conveyance to McNeill was cognizant of those facts.

The record of the conveyance from Pierson to Carey shows that it occurred in the height of the boom period when it is a matter of common knowledge that few land transactions involving large sums of money were consummated for cash, but it was the common and prevailing practice for such transactions to be closed by the payment of part cash and balance secured by mortgage.

We do not hold that this was sufficient to put a subsequent purchaser on notice but it was a condition which should have accelerated the suspicion which the record shows was aroused in the mind of McNeill's attorney when the proposed deed was presented to him for approval; and the record shows that he only approved the deed when the agent for the title insurance company agreed to insure the title based upon that deed.

If the vendee had pursued any sort of a reasonable inquiry to ascertain the status of the title he would have found the outstanding mortgage in the hands of Mrs. Pierson, the widow of the vendee who acquired title from the Careys, and he would also have found in the County Judge's office the claim of Mrs. Pierson, as widow, against the estate of Carey, deceased, for the sum of $24,000, with the statement that the same was secured by an unrecorded mortgage on the lands sought to be conveyed.

Had the vendee, McNeill, or the title insurance company, seeing this red flag of danger written into the proposed conveyance from Mrs. Carey to Mr. McNeill, demanded an abstract of title, that abstract, if properly made, would have shown that the records in the office of the County Judge of Palm Beach County, Florida, disclosed that Mrs. Pierson held an unrecorded mortgage on the property sought to be conveyed to secure the sum of $24,000.

A great deal is said in the briefs concerning the conveyances from Carey to McNeill and from McNeill to Union Trust Company all of which were considered of little consequence because it is established in the record that McNeill acquired only a naked title such as it was to whatever it was and when he conveyed such title as he acquired to Union Trust Company he conveyed it acting as agent for Bill and conveyed it to Union Trust Company as the agent of Bill. It is too well settled to require discussion that one agent cannot convey realty to another agent of the same principal and thereby clothe the grantee agent with a status of a bona fide purchaser. If such procedure could so result, then fraud could be perpetrated without hindrance. A could procure conveyance without warrant to his agent B, have B...