Opinion
No. 35204.
January 18, 1943. Suggestion of Error Overruled February 15, 1943.
1. VENDOR AND PURCHASER.
Where prior deed to land was withheld from record until grantor had executed deed to another grantee, if second grantee took as bona fide purchaser, whether purchaser from such grantee knew of prior deed was immaterial.
2. VENDOR AND PURCHASER.
In absence of actual notice of prior unrecorded conveyance, mala fides of grantee precluding him and those claiming under him from asserting superiority of title must be shown, if at all, by circumstances that would reasonably put grantee upon notice or inquiry.
3. VENDOR AND PURCHASER.
Where record owner of land remains in possession after conveyance thereof by deed withheld from record, subsequent purchaser is not charged with "notice" nor put upon inquiry as to the true situation.
4. VENDOR AND PURCHASER.
Where record owner of land remained in possession after conveyance thereof by deed withheld from record, such substantial change in occupancy as to arrest notice of prospective purchaser was necessary to charge subsequent purchaser with "notice" of true state of title.
5. VENDOR AND PURCHASER.
In determining whether grantee of record owner in possession of land was chargeable with "notice" of prior unrecorded conveyance, evidence that grantor claimed land during years prior to second conveyance was relevant as indicating probable results to which an inquiry by grantee would have led.
6. VENDOR AND PURCHASER.
Use of part of land by stepson of record owner in possession was not inconsistent with title of record owner so as to charge subsequent purchaser with "notice" of prior unrecorded conveyance.
7. VENDOR AND PURCHASER.
Evidence that grandson living with record owner and stepson cultivated land and conflicting testimony as to whether stepson was tenant of record owner or of grantee in unrecorded deed failed to show such apparent change in ownership inconsistent with record title as would charge purchaser from record owner in possession with "notice" of prior unrecorded deed.
APPEAL from the chancery court of Leake county, HON. M.B. MONTGOMERY, Chancellor.
A.M. Warwick and Harold W. Davidson, both of Carthage, for appellant.
It is a settled principle of law in our state that a purchaser from an innocent purchaser also acquires that status, although he may have actual notice himself of another's title or claim on the property.
In this case the defendant, V.F. Lay, took the title of his grantor, T.G. Chipley, even granting that V.F. Lay had notice of complainant's claim.
Lusk v. McNamar, 24 Miss. (2 Cushm.) 58; Fulton v. Woodman, 54 Miss. 158; Price v. Martin, 46 Miss. 489; Equitable Sureties Co. v. Sheppard, 78 Miss. 217, 28 So. 842; Barksdale v. Learnard, 112 Miss. 861, 73 So. 736.
Appellant's contention is that the court erred in holding that T.G. Chipley was not an innocent purchaser without notice and for value.
The appellee relies entirely on notice by tenancy to constitute notice to Mr. Chipley of his claim to this land. The tenants he claimed to have had prior to or at the time Mr. Chipley purchased were John Boyd and Warner Stewart, and appellant respectfully asserts that the lower court was in error in holding that the tenancy of either, or both of these parties, was sufficient in point of law to constitute notice sufficient to put Mr. Chipley on inquiry and that if he had made investigation it would only have confirmed his belief that John Boyd was the owner of the land.
The rule of the weight of authorities is that (1) the possession of real estate by a vendee under an unrecorded deed operates as constructive notice of his rights only when his possession is open, notorious, and exclusive, and (2) such vendee's possession jointly with his vendor is not such notice.
Loughridge v. Bowland, 52 Miss. 546; Kendrick v. Colyar (Ala.), 42 So. 110; Hargis v. Lawrence, 135 Ark. 321; Munn v. Achey et al., 110 Ala. 628, 18 So. 299; 2 Pomeroy's Equity Jurisprudence (5 Ed.), Sec. 620, p. 694, et seq.; 66 C.J. 1168, Sec. 1014; 66 C.J. 1179, Sec. 1026; 66 C.J. 1179, Sec. 1028; 66 C.J. 1167, Sec. 1011.
O.H. Barnett, Jr., of Carthage, for appellee.
On the threshold of the case we are met with the rule of the law that the Supreme Court will not reverse a finding of fact by a lower court unless the appellate court can say with certainty that the finding of fact of the lower court was manifestly wrong.
The lower court, after hearing the testimony of the appellant and that of the appellee and the witnesses, was convinced that appellant was not an innocent purchaser and so held.
It is true that appellee had not recorded his deed at the time the Chipley deed was taken. It is true that appellee never actually lived on the land himself, but it is true and goes without contradiction that there was a change of tenancy and that it was known in the community that this land belonged to appellee and that Warner Stewart was Mr. Nutt's tenant for the years 1936 and 1937 and that he signed a rent note which described this identical land in it. We submit that the character of tenancy of Warner Stewart was sufficient to put Chipley on notice; to require him to investigate the matter, but we submit that he knew the true facts in the case but is hiding behind the fact that appellee's deed was not recorded.
Appellant relies on the case of Loughridge v. Bowland, 52 Miss. 546. The distinction between the Bowland case and the case at bar is that in the case at bar there was a change of tenancy. There were at least 3 different tenants in the case at bar.
We submit that we know of no better way to possess a piece of farm land than to cultivate it. It is said without contradiction in the record that Warner Stewart cultivated this land for two years, openly, actually, visibly and exclusively and that character of possession is sufficient under the law. This was sufficient to put Chipley on inquiry and whatever is sufficient to put one on inquiry is notice.
Harper v. Reno, Freeman's Chancery Reports 323; Taylor v. Mosely, 57 Miss. 544; Bratton v. Rogers, 62 Miss. 281.
See also 2 Pomeroy's Equity Jurisprudence (5 Ed.), Secs. 618, 623, par. 3.
Argued orally by A.M. Warwick, for appellant, and by O.H. Barnett, Jr., for appellee.
Complainant, Nutt, filed his bill to cancel, as a cloud upon his title to certain lands, the deed thereto of appellant and to enjoin certain acts of dominion exercised by the latter. The land involved is the N.W. 1/4 of S.E. 1/4, Section 11, Township 9 North, Range 6 East, Leake County. In 1932, the record owner thereof was one Boyd who executed a deed to Nutt on April 6, 1932. The deed was withheld from record until after a second deed from Boyd to Chipley executed and recorded exactly five years later. On May 9, 1940, Chipley deeded the lands to Lay. If such were the complete factual situation, the right of Lay would of course be superior. However, to avoid the effect of our registry laws Nutt contends (1) that Lay was not a bona fide purchaser from Chipley, and (2) that Chipley took his deed with actual or constructive knowledge of the change in ownership from Boyd to Nutt.
We need examine only the second proposition for if Chipley was a bona fide purchaser, the status of Lay as Chipley's grantee would be immaterial. Lusk v. McNamer, 24 Miss. 58; Equitable Securities Company v. Sheppard, 78 Miss. 217, 28 So. 842; Barksdale v. Learnard, 112 Miss. 861, 73 So. 736.
No actual notice to Chipley was shown. His mala fides must be shown, if at all, by circumstances which would reasonably put him upon notice or inquiry and which would be reasonably calculated to disclose the true state of the title. In 1932, when Boyd executed the deed to Nutt, the grantor was living upon and cultivating the land. The grantor remained thereon during the subsequent years up to and including the year 1940. In 1934, Boyd executed a crop mortgage covering this land, but this was not recorded. In 1936, the year prior to the deed to Chipley, one Warner Stewart, a stepson of Boyd, who lived about a quarter of a mile from grantor, cultivated part of this land. Nutt testified that Boyd remained upon the land with his permission but as his tenant and worked some of the land; that the assessment of the land remained in the name of Boyd who paid the taxes thereon up to 1936; that in 1936, the property was worked by Stewart as the tenant of Nutt. This last allegation is denied by Stewart who testified: "I don't know who I rented it from, but I carried some rent corn and carried it to Mr. John and he told me to take it to Mr. Nutt." During this year the land was cultivated jointly by Stewart and L.J. Boyd, grantor's grandson, who lived with John Boyd and his wife. During the period between the execution of the two deeds there was only one dwelling house on the land and that was occupied by grantor. Stewart testified that he did not rent from Nutt in 1937 but from Boyd the year in which Boyd executed his deed to Chipley. Chipley knew the grantor, Boyd, his grandson, and Stewart, the stepson. No one other than these cultivated the land prior to the deed to Chipley. Its manner of operation thereafter is not relevant. Where a grantor who is the record owner of land remains in possession and his deed to grantee is withheld from record, a subsequent purchaser is not charged with notice nor put upon inquiry as to the true situation. Appellee's case therefore must be grounded, if at all, upon such constructive notice as is predicable of the tillage of the lands during 1936 by Stewart. The trial court so construed the situation. As adverted to, Stewart, while he stated that he was a tenant of Boyd in 1937, did not comprehend his status as a tenant in 1936. He carried some produce to his stepfather, Boyd, as rental upon the assumption that he was working for him. While he was told to deliver same to Nutt, he did not fully appreciate to what arrangement it was pursuant. It is true that Nutt testifies that he rented the place to Stewart and that the following year Stewart executed a rent note to him but Stewart's understanding of this transaction was vague and the import and purpose of the "paper" signed by him was misunderstood.
Regardless of the effect of those decisions sustaining constructive notice where lands conveyed are in the possession of third persons as tenants or otherwise (Gordon v. Sizer, 39 Miss. 805; Stovall v. Judah, 74 Miss. 747, 21 So. 614, and cases cited), this principle finds exception where the possession is by relatives or members of grantor's family. Such exception finds additional strength where the record owner himself remains in possession and as here where a member of his household engages with the tenant in cultivating the land and where the owner continues to till part of the place. Hafter v. Strange, 65 Miss. 323, 3 So. 190, 7 Am. St. Rep. 659; Hiller v. Jones, 66 Miss. 636, 6 So. 465; Roderick v. McMeekin, 204 Ill. 625, 68 N.E. 473; Elliott v. Lane, 82 Iowa 484, 48 N.W. 720, 31 Am. St. Rep. 504; Rankin v. Coar, 46 N.J. Eq. 566, 22 A. 177, 11 L.R.A. 661; Burdick on Real Property, 521. There must be so substantial a change in the occupancy of the property as to arrest the notice of a prospective purchaser. Where the grantor who is the record and actual owner remains in possession a mere attornment by him to the grantee in an unrecorded deed is not sufficient to charge a purchaser with mala fides. Loughridge v. Bowland, 52 Miss. 546. The fact that Boyd was permitted by Nutt to remain in possession strengthens not the position of Nutt but of Lay. Nor is the relationship between Nutt and Stewart whatever it was, as important as the appearances by which alone the technical bad faith of Chipley must be established. It is relevant to consider here the probable results to which an inquiry, if required, would lead. In this connection we find that the testimony that Boyd claimed the land in 1936 and 1937 relevant, although excluded by the learned chancellor. While we do not hold that Chipley was put upon inquiry, it is proper to notice that such inquiry would probably not have disclosed a situation inconsistent with that which was apparent. The argument that Nutt's possession by a tenant, Stewart, was the possession of Nutt is to assume that Stewart was his tenant, a circumstance not shown by the records, and not fully understood by Stewart. The use of part of the land by Stewart was not inconsistent with the title of Boyd who was both the apparent and the record owner. Levy v. Holberg, 67 Miss. 526, 7 So. 431; Loughridge v. Bowland, supra; Niles v. Cooper, 98 Minn. 39, 107 N.W. 744, 13 L.R.A. (N.S.) 49, note at page 96; Wood v. Price, 79 N.J. Eq., 620, 81 A. 983, 38 L.R.A. (N.S.) 772, Ann. Cas. 1913A, 1210; Canfield v. Hard, 58 Vt. 217, 2 A. 136; Wright v. Wood, 23 Pa. 120; Pope v. Allen, 90 N.Y. 298; Burdick, op. cit., supra. Chipley before his purchase had searched the records for six years back. The record owner was his grantor and we are unwilling to assent to the contention that there was an apparent change in the ownership which was inconsistent with the record title such as to arrest the attention and provoke suspicion or inquiry upon Chipley.
Our registry laws are designed to prevent just this sort of unfortunate dilemmas where one of two purchasers in good faith must suffer loss. We are compelled in our solution to follow the course which both law and equity has prescribed. Vigilantibus sed non dormientibus leges subveniunt.
Reversed and decree here for appellant.