Shanabaeger v. Phares
| Decision Date | 23 March 1920 |
| Citation | 86 W.Va. 64 |
| Court | West Virginia Supreme Court |
| Parties | W. L. Shanabaeger v. C. II. Phares et al.Anna B. Shanabarger v. C. II. Phares et alandTucker County Bank v. Charles H. Phares et al |
A stipulation in a deed reserving a vendor's lien to secure payment of negotiable purchase money notes, providing for an abatement from the purchase money evidenced by the notes, in the event of a deficiency in the land, is not constructive notice of such right of abatement, to a purchaser of the notes for value and before maturity. (p. 67).
In the absence of proof of actual notice thereof at the time of his purchase or the legal equivalent thereof, he may recover the full amounts of the notes, notwithstanding the existence of a shortage in the land and right of abatement as between the parties to the conveyance. (p. 67).
But such right of abatement may be asserted in defense of a suit to subject the land on which the notes are so secured, to sale under the lien, for payment of the notes, the benefit of the lien being limited to the amount actually secured thereby, notwithstanding liability of the vendee to a purchaser of the notes before maturity, for value and without notice, for a larger amount. (p. 67).
Though a negotiable note and an instrument creating a lien on real estate to secure payment thereof are related documents usually executed at the same time and may be, and sometimes should be, construed together, for some purposes, they do not necessarily constitute one instrument in the legal sense of the terms, and they may be so interpreted as to permit each to perform its own function, agreeably to the intent of the parties. (P. 68).
In such case, the note is commercial paper performing the functions, and having the qualities, accorded to it by the law merchant, and the lien to secure payment thereof is ancillary collateral and incidental to it and legally separable therefrom, for full and complete effectuation of the intent and purposes of the parties to the two instruments, as disclosed by their terms. (P. 68).
Appeal from Circuit Court, Randolph County.
Separate suits by W. L. Shanabarger and by Anna B. Shanabarger against C. H. Phares and others, pending which the Tucker County Bank brought a suit against the same defendants. Causes heard together, and from a decree partly in favor of Tucker County Bank, plaintiffs W. L. Shanabarger and Anna B. Shanabarger separately appeal.
Reversed and remanded.
W. E. Baker and R. S. Irons, for appellants.
A. Jay Valentine, for appellee.
poffenbarger, judge:
The single question arising on this appeal pertains to the status of a vendor's lien securing payment of negotiable notes assigned before maturity, and providing for abatement or augmentation of the amounts of the notes, in the event of a deficiency in the land, in the one case, or an excess thereof in the other. The decree appealed from denies the vendee and his assigns the benefit of this provision, as against an endorsee of some of the notes, the court having held the land liable for the full amount represented by the notes, notwithstanding the existence of a very material shortage in the acreage of the land. Chas. H. Phares, his wife and his mother conveyed to Chas. B. Campbell a tract of land, estimated to contain 334 acres, in consideration of $3,500.00 of which $200.00 was paid in cash and the balance deferred in seven installments, represented by six $500.00 notes and a $300.00 note secured by a vendor's lien. The deed stipulated, however, for an abatement as to the difference between the actual area and 300 acres, if the former should be less than the latter, at the rate of $35.00 per acre, and for an addition to the last note, of compensation for the excess, if any, above 334 acres, at the same rate. There was no reference to this stipulation in the notes, but each of them bore this notation: "The same being a deferred installment of purchase money on land purchased of said Chas. H. Phares and others, and this note is secured by a vendor's lien on said land."
Campbell conveyed 100 acres of the tract to Anna B. Shanabarger, for and in consideration of $177.75 cash and the assumption of two of the $500.00 notes; and the balance of it to W. L. Shanabarger, for and in consideration of $248.25 in cash and the assumption of the other four $500.00 notes and the $300.00 note. In each of these deeds a vendor's lien was reserved to secure payment of the assumed notes. The deed to W. L. Shanabarger stipulated that the parties thereto should have the benefit of the agreement contained in the Phares deed, respecting deficiency and excess in the area of land.
About three years after these conveyances to the Shanabargers, they discovered the existence of a material deficiency in the land, within the meaning of the contract. Within the year of that discovery, Anna B. Shanabarger, having paid off the notes assumed by her, and W. L. Shanabarger, having paid off two of the $500.00 notes assumed by him, instituted their respective suits against the grantors in the original deed; the former to obtain releases of the two liens on her part of the property, securing the same debts, and the latter to obtain an abatement from the amounts represented by the notes, extinguishing them in whole or in part, and compel cancellation of the notes and releases of the liens securing them. Charles II. Phares interposed demurrers to the bills fded in these cases, which were overruled, and also his answers thereto. While said suits were pending and before the shortage in the land had been adjudicated, Phares endorsed one of the $500.00 notes and the $300.00 note to S. C. Simpson who endorsed them to the Tucker County Bank, before maturity; and the bank brought a third suit for enforcement of the vendor's lien on both portions of the original tract, denying any right in the owners to the provision in their favor, made by the stipulation for abatement in the event of a shortage, as against it, on the ground of its purchase of the notes for value and without notice of the right conferred by said provision of the deed. Defense was made to this bill and all three of the causes were heard together.
Upon the pleadings and proof, a shortage of 39.07 acres was found and adjudicated. One of the unpaid $500.00 notes, found to be still in the hands of Phares, was surrendered by him and cancelled. He and Campbell were required to execute releases of the liens reserved in their favor. Prior to the entry of the decree effecting these results, the bank had also released its lien, upon payment into court of the sum of $1,109.20, the aggregate of the principal and interest of the notes held by it, to stand as security for the debts, in lieu of the land. By the final decree, this sum was ordered to be paid to the bank.
This decree proceeds upon the theory of an enlargement of the security afforded by the vendor's lien, by the transfer of the negotiable notes secured by it. to a purchaser thereof for value and without notice. The abatement and compensation clause of the deed was not notice to the bank of the right it conferred. Dollar Savings and Trust Co. v. Crawford and Ashby, 69 W. Va. 109. Nor could the owners of the land have successfully set up any secret equity against the payee, in defense of a suit to enforce the lien, brought by a bona fide purchaser of the notes without notice thereof. Carpenter v. Longan, 16 Wall. (...
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