Wiscomb v. Cubberly

• Decision Date: 11 February 1893
• Citation: 51 Kan. 580,33 P. 320
• Parties: L. J. WISCOMB et al. v. L. D. CUBBERLY
• Court: Kansas Supreme Court

33 P. 320

51 Kan. 580

L. J. WISCOMB et al. v. L. D. CUBBERLY

Supreme Court of Kansas

February 11, 1893

Error from Osage District Court.

ACTION on two promissory notes and to foreclose a mortgage. Judgment for plaintiff, Cubberly, July 1, 1889. The defendants bring the case here. The facts are set forth in the opinion.

Judgement affirmed

Gleed & Gleed, for plaintiff in error Monadnock Savings Bank.

P. L Soper, for plaintiffs in error Wiscombs and Topeka Investment and Loan Co.:

When the case was called for trial, defendants Wiscomb and wife and the Monadnock Savings Bank, each for themselves, demanded a jury to try the issues of fact, which demand was by the court overruled. It is made to appear that "it was stated in open court that the only matters in issue were priorities of the different alleged liens."

Plaintiff in error the Monadnock Savings Bank claims the protection of an innocent purchaser for value. It claims that, as to it the assignment from Hutchinson to Cartwright was void because not recorded. It also claims that the note sued on by Cubberly, which fell due February, 1882, was barred by the statute of limitations. It also claims some other points of error, which will be noted. The mortgage of the Monadnock Savings Bank was executed and delivered in February, 1886. This was subsequent to the execution of the Caylor mortgage and subsequent to the assignment of that mortgage by Vancil to Hutchinson, and subsequent to the execution and recording of the release of the mortgage from John Hutchinson. The Monadnock Savings Bank was, therefore, an innocent purchaser for value, without notice, and is entitled to such protection, as against the Caylor mortgage. Comp. Laws of 1885, ch. 22, §§ 19-21.

A mortgagee is a purchaser. Devl. Deeds, § 631; Jordan v McNeil, 25 Kan. 459; 52 Iowa 67; 130 Mass. 289. The testimony is undisputed that the Monadnock Savings Bank was a purchaser for value, without actual notice. The assignment from Hutchinson to Cartwright was not recorded, and therefore the bank had no constructive notice of that assignment. How then can that assignment have any validity? Cubberly answers by asking that as to us the previous assignment from Vancil to Hutchinson be declared void. That Vancil assigned the Caylor mortgage to Hutchinson, in July, 1881, was a fact averred by both parties, and a fact of which both parties had actual notice. Cubberly depended upon that assignment for his title to the security. The assignment is indorsed on his own mortgage, and witnessed, and that mortgage contains a certificate of the register of deeds that it has been spread upon the records. He had actual notice of the assignment. The Monadnock Savings Bank finds a copy of that assignment upon the records. The assignment, it is true, was not acknowledged; but the Monadnock Savings Bank also found upon the records a duly-acknowledged release from Hutchinson to the assignee, which release recited that assignment, so that both parties, the Monadnock Savings Bank and Cubberly, at all times had actual notice that the assignment had been made from Vancil to Hutchinson.

Cubberly asks to have that assignment declared void as to the bank, but valid as to himself; and he asks this by virtue alone of § 21 of the statute of conveyances, which says:

"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 register of deeds."

Cubberly is within the exception. He, as well as the bank, had actual notice of the assignment, and therefore, as against him, it is perfectly valid. He cannot, in any event, have it declared valid as to himself and void as to the bank. He is estopped to have the assignment declared void when he sets up that assignment in the petition as a part of his case.

The legal effect of actual notice or knowledge is the same as that of constructive notice, which is a mere artificial substitute for knowledge. 2 Pom. Eq. Jur., P 603. Both parties having actual notice, Cubberly is in precisely the same position that he would have been had the assignment, as recorded, been constructive notice. See Devl. Deeds, §§ 710, 718, 1000.

When the Topeka Investment and Loan Company and the Monadnock Savings Bank examined the records, they found an assignment of the Caylor mortgage, executed by Vancil, and witnessed, and certified to have been copied from the original instrument. Though this may not have been entitled to record, it was such actual knowledge as is discussed in Pomeroy's Equity Jurisprudence, vol. 2, p. 34. See, also, Devl. Deeds, § 707; Wade, Not., § 4; Musick v. Barney, 49 Mo. 458; Gilbert v. Jess, 31 Wis. 110; Hastings v. Cutler, 24 N.H. 471; Musgrove v. Bonser, 5 Ore. 313.

There were two assignments. That from Vancil to Hutchinson was witnessed and recorded, and, though not acknowledged, recited in a subsequent acknowledged release. All the parties to this controversy had actual knowledge of it; all pleaded it and depended upon it. The assignment, on the other hand, from Hutchinson to Cartwright was willfully or negligently kept off the record for six years, and no party to this suit knew of it, or had any reason to suspect it, except Cubberly. The first assignment is valid, because all parties had full knowledge of it. The second is void, because it is not recorded, and nobody had the slightest suspicion of its existence.

A release by a mortgagee, although he may not own the mortgage or note, will protect the innocent purchaser for value. 9 Pa. 32; Lewis v. Kirk, 28 Kan. 497; 2 Jones, Mort., P 958.

The court below decided the case on the authority of Fisher v. Cowles, 41 Kan. 418. In that case the assignment, being unacknowledged, was held bad as against a subsequent purchaser who had no actual knowledge of the assignment, and who relied on a release given by the original mortgagee. The court is asked by Cubberly, in this case, to protect him by holding void an assignment of which Cubberly had actual knowledge, and which same assignment he sets up in his petition in support of his title to the mortgage sued upon. See Pritchard v. Kalamazoo College, 47 N.W. 31; Mason v. Beach, 55 Wis. 611; Bowling v. Cook, 39 Iowa 200; Bank of Indiana v. Anderson, 14 id. 544; 19 Hunter, 158; Turpin v. Ogle, 4 Bradw. 611; Smith v. Keohane, 6 id. 585.

In Henderson v. Pilgrim, 22 Tex. 464, the court uses the following strong language:

"It is the duty of the assignee of a mortgagee upon land to make his assignment a matter of record; and if he fail to do so he should suffer, rather than the subsequent purchaser, who is deceived by appearances, and has no notice or record to guide him."

The law in Kansas is in accordance with the above decisions. See Lewis v. Kirk, 28 Kan. 505.

The plaintiff bank has acted throughout the entire transaction with prudence and diligence, and in perfect good faith. Even if we give Cubberly credit for the utmost good faith in this transaction, it cannot be disputed that he has acted very negligently. He and his immediate assignor held an instrument which was entitled to record nearly six years without recording it. Is it just that this plaintiff should suffer for this neglect?

Pleasant & Pleasant, for defendant in error:

Plaintiffs in error claim that the records showed that Hutchinson was assignee, and, therefore, a release from him protects them. This is erroneous. The assignment of the mortgage to Hutchinson was not acknowledged and not entitled to record, and no one could rely upon the record of it in a chain of title. Before they can take precedence of Cubberly, they must show that the record was in such condition as to make it appear affirmatively therefrom that the title was clear in their grantors. Warv. Abs. 334; O'Neill v. Douthitt, 40 Kan. 689.

If there were not enough legally recorded instruments on record to show title clear in the Wiscombs, or if the record was such as to leave it doubtful or uncertain who had title, then the effect could only be to stimulate those about to purchase to make inquiry. A purchaser examining the records can only be protected by the records of such instruments as are legally recorded, and most certainly not by those which have been spread upon the books contrary to law. Section 19 of the act regulating conveyances says that it is instruments that have been proven or acknowledged in a prescribed manner that may be recorded. Section 20 of said act says such instrument certified and recorded in this prescribed manner imparts notice of the contents thereof, and § 21 says no such instrument shall be valid, etc., until recorded. So it is clear that plaintiffs in error could not rely upon this record and be protected by it, as against the real owner of the first mortgage, unless this record of the assignment showed it to have been acknowledged and certified as the law requires. Spreading it upon the records would not give constructive notice of its contents, and imparted no notice whatever. Fisher v. Cowles, 41 Kan. 418; O'Neill v. Douthitt, 40 id. 689; Wickersham v. Zinc Co., 18 id. 481; Meskimen v. Day, 35 id. 46; Kelley v. McBlain, 42 id. 765; Devl. Deeds, § 656.

Plaintiffs in error claim that under the mortgage law Hutchinson could release because he was assignee; but at the time of the pretended release he had not been assignee for over four years. Lewis v. Kirk, 28 Kan. 497, is not in point, because in that case the release was by the mortgagee; the release in Fisher v. Cowles, 41 Kan. 418, was made by the mortgagee; and in both of these cases the record showed affirmatively that the mortgagee had authority to release. In the latter case, the court holds the record of the assignment a nullity because not acknowledged.

Plaintiffs in...