State Bank v. Frame

• Decision Date: 29 November 1892
• Citation: 112 Mo. 502,20 S.W. 620
• Parties: STATE BANK OF ST. LOUIS v. FRAME et al.
• Court: Missouri Supreme Court

20 S.W. 620

112 Mo. 502

STATE BANK OF ST. LOUIS v. FRAME et al.

Supreme Court of Missouri, Division No. 2.

November 29, 1892.

SALE OF LAND — PURCHASER FOR VALUE — DISCHARGE OF PREVIOUS DEBT — TRANSFER OF MORTGAGE NOTE — WAIVER OF LIEN — TRANSFERRER AS AGENT OF TRANSFEREE.

1. Where a deed is made in consideration of the absolute discharge of a pre-existing debt of the grantor to the grantee, or of an adequate portion of it, the grantee is a purchaser for value, and he will be protected against a previous unrecorded deed of the same grantor, of which he had no notice.

2. D. made a note to B., secured by deeds of trust on two farms, which note was assigned to plaintiff before maturity. The deeds were not recorded, and defendant, a subsequent purchaser of one of the farms, alleged that B.

promised her that the deed of trust on that farm would be canceled, and not enforced, thus inducing her to purchase. The evidence showed that B. retained the deeds after assigning the note, that the deed to B. of the other farm was recorded under directions from B., and after he had consulted plaintiff as to the advisability of recording the deeds, and that the deed to the farm claimed by plaintiff was carried by D. to B.'s residence, though plaintiff at the time knew it had not been recorded. Held, that it was a question for the jury whether B. had authority to control the deeds of trust and bind plaintiff by his statement that the one on the farm purchased by plaintiff would not be enforced.

Appeal from circuit court, Saline county; RICHARD FIELD, Judge.

Ejectment by the State Bank of St. Louis against Leonard Frame and others. Judgment for plaintiff. Defendants appeal. Reversed.

John A. Walker and Draffen & Williams, for appellants. John G. Chandler and John Cosgrove, for respondent.

MACFARLANE, J.

The suit is ejectment, commenced in Morgan county, to recover 242½ acres of land situate in said county. The answer of defendant Frame was a general denial. Samuel C. James, trustee for Lucy Doran, Lucy Doran herself, and her husband, Benjamin F. Doran, were made defendants on their own motion, and filed an answer setting up a general denial and an equitable defense. Defendant Frame was the tenant of defendant James, who claimed the land as trustee for Mrs. Doran. By their equitable defense they charged that plaintiff's only claim of title was under a deed of trust made by defendant Benjamin F. Doran on December 22, 1885, and filed for record July 12, 1887, to secure the payment of a note of $20,000, payable to the order of W. G. Bartle 90 days after date, and a sale thereunder, and deed by the trustee to plaintiff, dated June 14, 1888. The answer then sets up in detail a state of facts under which it is claimed that the trustee's sale and deed should be set aside and canceled, which defendants asked should be done. The case was taken by change of venue to Saline county, where it was tried, a judgment rendered for plaintiff, and defendants appealed. On the trial both parties claimed title under defendant B. F. Doran, — plaintiff under the sale by the trustee under deed of trust before mentioned, and defendant under a deed directly from Doran to James, as trustee for Mrs. Doran, dated January 6, 1887, and recorded January 8, 1887, for an expressed consideration of $3,500. After the introduction of these deeds defendant offered evidence showing that on the 22d day of December, 1885, B. F. Doran made two deeds of trust to secure the note of $20,000, payable to Bartle, — one on the land in dispute, situate in Morgan county, and under which plaintiff claims, and the other on about 500 acres of land in Cooper county. The evidence tended to prove that these deeds were both withheld from record at the request of Doran, who was an extensive dealer in live stock, to avoid injuring his credit. Bartle was a brother of Mrs. Doran, and James was a son-in-law. About the 1st of January, 1887, Doran recognized his own insolvency and inability to continue his business. He owned the two farms held under the two deeds of trust, and personal property valued at about $8,000. His debts largely exceeded the value of his property. Among his debts, as claimed, was a note to his wife for $6,000, dated March 2, 1884. At the request of Mrs. Doran, her son-in-law, James, went to St. Louis on the 5th of January, 1887, to see Bartle, who lived there, and to try to make some arrangement about securing her debt. Mr. Doran went to St. Louis at the same time. The $20,000 note made by Doran to Bartle had been assigned to the plaintiff bank before its maturity. On January 6th Bartle, Doran, and James met in St. Louis, and talked over the matter, and the evidence of defendants tends to prove that they came to an agreement and understanding that the deed of trust on the Morgan county land should not be recorded or enforced, and that Doran should convey to James, as trustee for Mrs. Doran, the land in dispute, and in consideration therefor she would satisfy Doran's note to her to the extent of $3,500. Bartle at the time had in his possession the deed of trust, which all the parties saw. The next day the parties all went to the residence of Doran, in Cooper county, and the deed was executed and acknowledged, conveying the land to James as trustee, in pursuance of the previous agreement, and Mrs. Doran entered a credit for $3,500 on the note. After that James took possession of the land, paid delinquent taxes, amounting to $100, and made some improvements. Neither James nor Mrs. Doran knew the note had been transferred to the bank, nor did they make inquiries about it. The evidence of plaintiff tended to prove that there was no agreement to withhold the deed of trust from record, that it never agreed not to set up any claim on the Morgan county land, and never authorized Bartle to make such an arrangement. It also tended to prove that the only talk about releasing the deed of trust was on condition that Mrs. Doran would release her dower in the Cooper county land, which she had afterwards refused to do. The court, at the request of plaintiff, declared, as a matter of law, that, upon the pleadings and undisputed evidence, plaintiff should recover. The court refused to declare the law to be, as asked by defendants, that if Doran was indebted to Mrs. Doran, and the deed to James, trustee, was accepted by her in part payment and satisfaction of her debt, then she was a purchaser for value of the lands in controversy; that if, when they bought the land, the only notice they had of the existence of the deed of trust was from the statements of Bartle, and seeing him have the deed of trust, and that Bartle stated that said deed of trust would never be filed for record, but would be surrendered, and that no lien was claimed on said land by virtue of said unrecorded deed of trust, then there was no such notice that said deed of trust was an existing and valid lien upon said land as to make defendants James and Mrs. Doran purchasers with notice of, and subject to said deed of trust. The court entered judgment for the plaintiff for the possession of the land, and for rents and profits. Defendants appealed.

1. Whether the satisfaction of a pre-existing debt is a consideration sufficient to protect a purchaser of real estate against a prior unrecorded deed, of which he has no notice, has never been definitely and directly passed upon by this court, so far as we are advised. A strict and liberal interpretation of the statute would make any consideration which might be sufficient between the parties to uphold the deed sufficient also to protect the purchaser. The statute provides that every instrument in writing that conveys any real estate shall be recorded, (section 2418,) and shall thereafter impart notice to all persons of the contents thereof; "and all subsequent purchasers and mortgagees shall be deemed, in law and equity, to purchase with notice," (section 2419.) Section 2420 is as follows: "No such instrument in writing shall be valid, except between the parties thereto, and such as have actual notice thereof, until the same shall be deposited with the recorder for record." A strict legal construction has not generally been placed upon such statutes. While it is held that the instrument itself may be invalid until recorded, it is also held that the purchaser acquires, by his purchase, an equitable right in the land, which will not be defeated except by a purchaser for value without notice. The chancellor, in Dickerson v. Tillinghast, 4 Paige, 215, gives the construction placed upon the English statute, which he approves, thus: "The English registry acts made the unregistered deed or incumbrance at law wholly inoperative and void as against a subsequent grantee or incumbrancer. But the court of chancery, in accordance with the manifest spirit and intention of the statute, at an early day adopted the principle of considering the prior deed or incumbrance as an equitable title or lien. It therefore applied to such cases the equitable principles, which had previously been adopted by that court, in relation to other contests between the holder of an equitable title or lien and a subsequent grantee or mortgagee of the legal title." This construction is equitable and just, and has ever been recognized by the profession and trial courts of the state as applying to our recording act. The same rule is clearly recognized by this court in Davis v. Owenby, 14 Mo. 176, where the judge says: "There must be title for value under the grantor, to admit the question [want...