Todd v. Outlaw

• Decision Date: 30 June 1878
• Citation: 79 N.C. 235
• Court: North Carolina Supreme Court
• Parties: TODD, SCHENCK & CO. v. E. R. OUTLAW.

79 N.C. 235

TODD, SCHENCK & CO.

v.E. R. OUTLAW.

Supreme Court of North Carolina.

June Term, 1878.

CIVIL ACTION to recover Land, tried at Spring Term, 1877, of BERTIE Superior Court, before Eure, J.

The plaintiffs claim under a mortgage executed to them by one Vernoy, to secure advances for agricultural purposes on the 2nd of March, 1874, and duly recorded on the 10th of that month. The defendant claims as a purchaser under a decree of foreclosure of a mortgage of the same land executed by said Vernoy and wife on the 16th of February, 1866, to one Bond (vendor and mortgagee) to secure the unpaid balance of the purchase money of the land. The execution of this latter mortgage was acknowledged before one John J. Hornbeck, a Justice of the Peace of Ulster county, New York, as certified by N. Williams, the clerk of said county. At the May Term, 1866, of the Court of Pleas and Quarter Sessions of Bertie county, North Carolina, where the land is located, the following proceedings were had in relation to the mortgage:--

+------------------------------------------+
                ¦STATE OF NORTH CAROLINA,¦)¦               ¦
                +------------------------+-+---------------¦
                ¦                        ¦)¦May Term, 1866.¦
                +------------------------+-+---------------¦
                ¦Bertie County.          ¦)¦               ¦
                +------------------------------------------+
                

This mortgage from Milford Vernoy and wife Martha, to Lewis T. Bond, was exhibited in open Court and ordered to be registered together with the certificate of John J. Hornbeck, a Justice of the Peace of Ulster county, New York, and of N. Williams, clerk of Ulster county, New York.

+-----------------------------------+
                ¦Signed¦W. P. GURLEY, Probate Judge.¦
                +-----------------------------------+
                

Upon this certificate and order, the mortgage was registered in May, 1866.

It was insisted by the defendants, that this registration, though not regular in form, was sufficient to pass the title, and that if the probate and registration were defective for that purpose, yet the registration was notice to all the world of the existence of the incumbrance, and that the plaintiffs therefore purchased subject to the lien.

His Honor being of opinion with defendant, gave judgment accordingly, and the plaintiffs appealed.Messrs. D. A. Barnes and J. B. Batchelor, for plaintiffs .

Messrs. P. H. Winston and Gilliam & Gatling, for defendant .

BYNUM, J. (After stating the case as above)

1. The statute provides that “no deed of trust or mortgage for real or personal estate shall be valid at law to pass any property as against creditors or purchasers for a valuable consideration, from the donor, bargainor or mortgagor, but from the registration of such deed of trust or mortgage in the county where the land lieth.” Bat. Rev. ch 35, § 12. How mortgages executed without the State, for lands lying within the State, shall be proved without the State before they can be duly registered, is prescribed by statute, Bat. Rev. ch. 35, §§ 7, 8, and it is sufficient to say the mortgage from Vernoy to Bond has not been probated as the law directs, and that upon such probate it was not entitled to registration. Until a deed is proved in the manner prescribed by the statute, the public register has no authority to put it on his book; the probate is his warrant and his only warrant for doing so. Williams v. Griffin, 4 Jones 31; Burnett v. Thompson, 3 Jones 113; 11 Ire. 162; Carrier v. Hampton, 11 Ire. 307. Not having been duly proved, the registration was ineffectual to pass the title as against creditors or purchasers. Robinson v. Willoughby, 70 N. C. 358; 2 Ire. Eq. 584; Busb. Eq. 283.

2. Does such a registration as this have the effect of notice to the world of the mortgage from Vernoy to Bond, so as to affect a subsequent purchaser?

The mortgage from Vernoy to the plaintiffs had the effect of passing the legal title, and if the registration of the mort gage to Bond did not impart notice to the plaintiffs, they will hold the land discharged of any prior equity. Polk v. Gallant, 2 Dev. & Bat. Eq. 395; Winborn v. Gorrell, 3 Ire. Eq. 117. It is in cases where actual notice is so clearly established as to make it fraudulent in the purchaser to take and register a conveyance in prejudice of the known title of another, that the registered deed will be permitted to be affected. With this limitation it is only a duly registered mortgage that will affect the subsequent purchaser with notice. Flemming v. Burgin, 2 Ire. Eq. 584; Leggett v. Bullock, Busb. 283; Robinson v. Willoughby, 70 N. C. 358. It is not pretended that the plaintiffs had any such, or other notice than that which might have been derived from the imperfect registration of the prior mortgage. That a mortgage registered in a manner not authorized by law is neither actual nor constructive notice, is decided in DeCourcy v. Barr, Busb. Eq. 181. Barr executed three mortgages. The third mortgagee sought to redeem the first and avoid the second mortgage upon the ground that though registered prior to his own, it was upon an insufficient probate, and therefore inoperative as to him. The defect of probate consisted only in this, that though taken in regular form before a duly appointed commissioner for the State, resident in New York, the deed proved, was the deed of a resident of this State, for land in this State, whereas the statute only authorized the commissioner to take probate of deeds of non-residents. It was insisted in that case, as it has been here, that this mortgage was spread upon the record, and for all useful purposes had the same notoriety as if it had been duly proven, so that it was urged the objection was merely technical. But the Court said that what was not done in due form was not done at all in contemplation of law, and that the plaintiff therefore might stand on legal rights and seize a plank in a ship wreck. It was also held that the adjudication of the clerk that the deed was duly proved, will not aid, where the certificate of the commissioner is annexed to the deed and shows that he was incompetent to take the probate. The same rule as to actual and constructive notice prevails in those States where registry laws are similar to ours; their Courts holding that express notice of an unrecorded mortgage will not invalidate one which is duly recorded. Stansell v. Roberts, 13 Ohio, 148; Mayham v. Coombs, 14 Ohio, 428; LeNeve v. LeNeve, 1 S. L. C. American notes. Coot's Law of Mortgages 370, and notes to page 384.

3. The defendant insists that the instrument reconveying the land from Vernoy to Bond by its registration, though it may be defectively registered, had the effect of creating an equity in Bond, the vendor, which followed the deed and attached to the legal estate transmitted to the plaintiffs, and will be protected and enforced, and for this position he cites Derr v. Dellinger, 75 N. C., 300. That was not the case of a mortgage, and it stands altogether upon different grounds. Derr purchased and acquired the legal title with express notice of an outstanding bond for title to another party who had contracted to purchase the same land. A contract to sell land is not required to be registered and take effect only from registration like a mortgage, but like a deed when registered it relates back to the date of the contract. Bat. Rev. ch. 35, § 24. Derr therefore having had notice of the bond for title took the legal estate subject to the prior equity. Had he purchased without notice the Court clearly intimate that the equitable estate would have been annihiliated. We are not called upon to say how that would be. Derr purchased with, while the plaintiffs purchased without notice.

4. The defendant again insists that the plaintiffs had notice by lis pendens, in that, they purchased during the pendency of an action by Bond against Vernoy to foreclose the mortgage upon the land now in controversy. The principle of lis pendens is that the specific property must be so pointed out by the proceedings as to warn the whole world that they meddle with it at their peril, and the pendency of such suit duly prosecuted is notice to a purchaser so as to bind his interest. Adams Eq. 157, and notes. As the law was prior to the adoption of our Code, and as it was in England prior to 2 Victoria, an action for land so prosecuted and pending would have been notice to the world, and the purchase of the land by the plaintiffs after the institution of the action and before the decree of sale, would have been disregarded and treated as a nullity....