Opinion
No. 37302.
December 31, 1949.
1. Deeds — unrecorded — constructive notice — explanation of title.
When on the examination of a title, the public records disclose that the entire title to a particular tract of land is owned by a named person, the examiner is not required to go further and examine all the records of deeds and mortgages to see whether some other person than the record owner had executed some conveyance or mortgage.
2. Deeds — unrecorded — constructive notice.
Where the owner (A) of the record title to a tract of land has conveyed it to another (B) but the deed is never recorded, a deed of trust given by the grantee (B) is not constructive notice to a bona fide purchaser (C) from the former owner of the land (A).
Headnotes as approved by Roberds, J.
APPEAL from the chancery court of Neshoba County; J.K. GILLIS, Chancellor.
W.T. Weir, for appellants.
Morgan was not informed as to any lien in fact but had he examined the record he would have found the alleged deed of trust of record. But in so doing had he further pursued his search, he would not have found any deed of record to Luken. It would have only showed that Luken gave a deed of trust but he would also have failed to find that Luken had any title to the lands and therefore had no authority to execute a deed of trust thereon; neither did he have any title or interest therein and therefore his claim of title would be void and of no effect.
We submit that the man who could have taken care of himself was the defendant W.H. Mars. It appears from his testimony that O.C. Smith owed him on a trust deed prior to this and which said deed of trust had been cancelled on the 19th day of March, 1943. It is apparent that the defendant Dr. W.H. Mars advanced his money on an unrecorded deed that he claims to have seen and if he had been diligent, he could, and we respectfully submit that he should, have seen to it that the deed presented to him was recorded. Under this state of the record he could have withheld the advancement of his money until the deed could be recorded. This he did not do.
The case of Hiller v. Jones, 66 Miss. 636, 6 So. 465 holds that, "A purchaser of land need not look beyond the record of deeds to a former occupancy under a deed of which he had no notice; though possession, under an unrecorded deed, which shows a perfect legal title, is, while it continues, equal to a registration of the deed." In the opinion the Justice (Campbell) used the following language and asks the question to-wit: "May purchasers rely on the muniments of title spread upon the records designated by law as the repository of the history of titles to land as being truthful memorials of the consideration expressed in them, until something is shown inconsistent with what they state?" The court cited the cases of Hundley v. Bickner, 6 Smedes M. 70 and Brown v. Bartee, 10 Smedes M. 268 in this opinion.
We submit that had Morgan investigated the record he would have only found the Luken deed of trust which was standing like a house without foundation or cover, and we respectfully submit that the cause ought to be reversed and judgment for appellant.
Dees Stribling, for appellees.
If Morgan had examined the records he would have found the trust deed of record. Had he found the trust deed of record it would have been his duty to pursue the information disclosed by the deed of trust and such pursuit would have disclosed the existence of the deed from Smith to Lukens. See 55 Am. Jur., Vendor and Purchaser, Sections 696-697, pages 1074, 1075, 1076, 1077.
With reference to the case of Hiller, et al. v. Jones, 66 Miss. 636, 6 So. 465 cited by appellants, a study of this case indicates that two main points were there decided. The first was that a recorded conveyance acknowledging payment of the purchase money was prima facie evidence that the vendee was a purchaser in good faith for a valuable consideration. This holding came about because the appellee in that case contended that the statement of consideration in a deed should be treated as a mere receipt, and the court held that it was a part of the res gestae and a part of the conveyance itself. This point has no application to the case at bar. The other point decided by the Hiller case was that one purchasing under what appeared to be a perfect chain of title according to the record need not look beyond to a former occupancy of land under a deed of which such party is not shown to have had notice. In the Hiller case there were no deeds of trust to apprise the subsequent purchaser of the existence of any encumbrance against the land there involved, whereas, in the case now before the court the deed of trust from Lukens to Mars was of record for any examiner of the records to see and the fact of its recordation was certainly sufficient to put an ordinarily prudent man on notice that the land in controversy in the case at bar had been conveyed in trust which should have and would operate to require the appellants to follow up such notice by reasonable inquiry. A reasonable inquiry would have disclosed the true facts with reference to the unrecorded deed from O.C. Smith to Glen K. Lukens.
There should also be taken into consideration the deed of trust executed in 1936 from O.C. Smith to W.H. Mars, beneficiary, conveying in trust the NW 1/4 of NE 1/4 especially in view of the fact that according to the record the cancellation of the deed of trust from Smith to Mars was filed in the chancery clerk's office only six days after the filing of the new deed of trust from Lukens to Mars. A consideration of this fact should have given notice to any and all persons that Dr. W.H. Mars, the appellee, continuously had a lien on the NW 1/4 of the NE 1/4 and such notice coupled with the constructive notice afforded by the later deed of trust, that is, the one from Lukens to Mars, was certainly ample to preclude the acceptance of the contention that the appellants were bona fide purchasers.
The determining question in this case is whether appellants, when they purchased and received a deed to the eighty acres of land here involved, had constructive notice of an existing trust deed upon the land in favor of W.H. Mars, under the circumstances hereinafter set out. The chancellor held that appellants did have such notice, and that, therefore, they were not innocent purchasers of the land.
These were the facts: On and before March 19, 1943, O.C. Smith held the record title to the west half of the northeast quarter of Section 1, Township 9, Range 11 East, situated in Neshoba County, Mississippi, title to which is the subject of this litigation. Mars, at that time, was the beneficiary in a recorded deed of trust executed by Smith upon the north forty acres of that tract securing $432.00. Smith, on March 13, 1943, executed a deed to the eighty acres to Lukens, and Lukens then executed a trust deed thereon to Mars to secure $964.80. Mars on that day satisfied of record the Smith trust deed and placed of record the Lukens trust deed. However, the deed from Smith to Lukens was not recorded. On June 18, 1945, Smith and wife executed a warranty deed conveying the eighty acres to Lott Morgan, one of appellants. On July 14, 1945, Smith and wife executed another deed, a quitclaim, to Lott Morgan and his wife, the appellants. The trust deed from Smith to Mars, which Mars satisfied on the record, and the deed of trust from Lukens to Mars, on the face of the instruments, secured general debts. The latter made no reference to the former. The deeds from Smith to the Morgans recited $700 as being the consideration paid for the lands. Appellants, upon receiving their deeds, went into possession of the land and apparently so continued until time of the trial. The trustee in the Lukens-Mars trust deed advertised the property to be sold January 9, 1948. That was the first time the Morgans had any actual knowledge that Mars claimed to have a deed of trust on the land. On January 5, 1948, they filed their bill in this cause, asserting they were innocent purchasers of the land free of any claim of Mars and asked for a cancellation of the Mars trust deed as a cloud upon their title. However, the trustee sold the property on the day named for the sale and it was bought by Mars. Mars answered that the record imputed constructive notice to the Morgans when they bought of the existence of the Mars trust deed. There is no contention that the Morgans, when they purchased, had any actual notice of the existence of the Mars trust deed or any constructive notice other than what the record of the Mars trust deed imparted to them. The chancellor held for Mars, and the Morgans appeal.
At once, [1] it is seen that an examination of the records at the time Morgan bought the property would have disclosed the record title to be in Smith. He, so far as the records showed, had never conveyed it away or encumbered it in any manner. There was no reason for a purchaser to think that some outsider, a stranger to the record title, had given a deed of trust upon, or made any conveyance of the land. He would have had just as good reason to search for some conveyance from John Doe or Richard Roe as from Lukens. No vendor's lien was retained on the land by the grantors of Smith nor did the Mars trust deed recite it was for the purchase price of the land, or any part of it, if indeed that would have made any difference, upon which question we do not pass. [2] This Court in two cases has held, under substantially the same circumstances, that the purchaser was not charged with constructive notice of the existence of a deed of trust. Hart v. Gardner, 81 Miss. 650, 33 So. 442, 497; Turner v. Bell, 143 Miss. 782, 109 So. 794, 795. In the Turner case, the Court said: "The conveyance by Burgess was not notice to the subsequent purchaser from Hyde, because the records did not disclose that Burgess ever had any title to convey. Therefore Turner, the subsequent purchaser, had the right to rely upon the record, as showing title in Hyde, when he purchased from Hyde. There must be some fixed and safe rule with reference to how far a purchaser must examine the records to determine as to who is the owner of a particular piece of property. The abstractor is not required to search all of the records, in order to see whether or not some outsider, unknown to the records, has conveyed the property to some other person. He may safely assume the title to be in the party shown by the records. The title here was shown to be in Hyde, which Turner purchased. * * *" In the case at bar, if we substitute Smith for Hyde and Lukens for Burgess and Morgan for Turner, we have the same situation, except that, if there is a material difference, the case at bar is stronger for appellants than the cited case was for Turner, for the reason that in this case the bill was filed before the Mars trust deed was foreclosed, and in the Turner case there had been a purchase at foreclosure sale before the suit was instituted.
Reversed and judgment here for appellants.