Smith's Heirs v. Branch Bank at Mobile , 21 Ala. 125 ( 1852 )

CHILTON, J.

— In order to disembarrass this case from the confusion in which so many mesne conveyances involve it, we may consider Smith, the defendant, as the vendor to Dubose and Kibbe, and as holding their mortgage to secure the purchase money. We may then, without changing the legal effect of the facts, lay out of view the sale to Meggison by D. and K., and the foreclosure of the mortgage taken by them; since the land was purchased by their agent, J. C. Dubose, who was the mere conduit for convenience sake of the interest of Dubose and Kibbe to the Bank.

It is too clear to admit of doubt, that an unrecorded mortgage, as between the parties themselves, is valid and binding: It is also valid as to all subsequent creditors or purchasers with notice of its existence. Smith v. Zurcher, 9 Ala. 208; Myers v. Peek’s Admr., 2 ib. 648; Tuttle v. Jackson, 6 Wend. 226.

It is equally clear, that if the mortgagor sells the land to an innocent bona fide purchaser, taking a mortgage from him to secure the purchase money, and obtains a decree of sale upon a foreclosure suit, at which, by himself or his agent, he becomes the purchaser, he is not in a condition to invoke the protection afforded a bona fide purchaser without notice, so as to defeat the mortgage he has executed to his vendor; for this would be to take advantage of his own wrong. “ His conscience,” says Judge Story, “is still bound by his meditated fraud, and if the estate revests in him, the original rights attach.” 1 Story’s Eq. § 410. The case, then, resolves itself into this: Considering Dubose and Kibbe as mortgagors to Smith, whose mortgage was not recorded, and as the vendors to the Bank, through their agent, J. C. Dubose, who swears he was a mere naked trustee, without any interest whatever, does the Bank, under the circumstances, and in view of the character of the deed executed to it, occupy the position of a bona fide purchaser for a valuable consideration without notice, within the meaning of our statutes declaring mortgages of real estate not recorded within sixty days to be void as against such purchasers ?

The instrument under which the Bank claims, is a quit claim deed, or, what is more appropriately designated by the common law term, a release. The effective words are, “that the said Dubose doth remise, release and forever quit claim, all his right, title, claim, &c., unto the said Branch Bank, in the full and actual possession now being, and its successors and assigns forever.” It is said in the Touchstone (p. 320) that the words most common and appropriate in a release, are, remisi, relaxavi, and quietum clamavi; and that a release may enure by way of passing the estate, as where one joint tenant or co-parcener releases his right to the other; or by way of passing the right, as where the disseisee releases to the disseisor; or, it may operate by way of enlarging an estate, where the releasee has an estate capable of being enlarged, and is in privity with the releasor; or by way of extinguishment. Gilb. on Ten. 55; Shep. Touch. 321; Co. Lit. 272; Bouv. Inst. vol. 2, p. 412.

At the common law, it is said, a freehold title could be released in five ways: 1. To the tenant of the freehold in fact or in law without any privity; 2. To the remainder-man; 3. To the reversioner without privity; 4. To one having a right only by privity; and, 5. To one having a privity only without right. 2 Bouv. Inst. 412; Gilb. Ten. 53; Co. Lit. 265. So that, according to the principles of the common law governing releases, the Bank, the releasee in this case, filling none of the above requisites, would not take the title of the releasor. But in this country, the technical rules relating to a release are generally held not to apply, and a quit claim deed is considered as passing the title of the releasor, without any warranty as to outstanding titles or incumbrances, but merely against the grantor himself, and those claiming under him, by descent, or by subsequent conveyances of the same interest previously transferred.

The grantor in this case only purports to release and quitclaim the title and interest which he had. The question then arises, what interest did he have ? The plain answer is, the mere equity, of redemption, nothing more, and this only passed bj tbe quit claim deed. Thus tbe Bank stands in tbe place of Dubose and Kibbe, tbe mortgagors, bolding only wbat they could sell, tbe equity of redemption.

Were we to bold that M. Dubose intended that bis agent, J. 0. Dubose, should sell a greater interest than be really bad, and by so doing enable tbe Bank to shelter itself under tbe plea of being a bona fide purchaser for a valuable consideration, so as to defeat the mortgage which D. and K. bad executed to Anderson, we should impute a fraudulent intent to tbe parties, when tbe deed which their agent has entered into justifies no such inference.

Tbe unregistered mortgage being valid and effectual as between tbe mortgagor and mortgagee, tbe subsequent sale of tbe entire estate by tbe mortgagor is a fraud upon tbe rights of tbe mortgagee; and the reason, I apprehend, upon which tbe statute proceeds in preferring tbe subsequent bona fide purchaser to tbe mortgagee, is, that one of two innocent persons must suffer by tbe fraud of a third party, and tbe mortgagee, failing to use the diligence which the statute requires in recording bis mortgage, is considered most in default, and is therefore properly adjudged by the statute to bear tbe loss.

But we are not allowed by tbe rules of law, any more than by the principles of common charity, to suppose fraud, when the. facts out of which it is supposed to arise may well consist with honesty and pure intention. State v. Kinkle & Lehr, 3 Ala. 352,

We cannot, therefore, in this case presume that the vendor of the Bank attempted to sell more than he might lawfully sell, which was the equity of redemption. This was his title, and this alone enures by the quit claim.

To enlarge the interest by construction, would' be to make a different contract from that which the parties have entered into: would be, by judicial interpretation, contrary to the face of the deed and the facts on which it is founded, to pass the entire estate, by investing it with the consequences of a fraudulent sale of the whole, when the grantor had but the equity of redemption; and this, too, for the • purpose of defeating the just lien of Smith for the purchase money which is due from Dubose and Kibbe. We feel quite confident no case can be found which carries the doctrine thus far.

The case of Oliver v. Piatt, 3 How. U. S. Rep. 333-410, which is cited with seeming approval by this court in Walter, et al. v. Miller & Co., 11 Ala. 1067, fully sustains us in the position, that the Bank, holding a mere quit claim deed, cannot be regarded as a bona fide purchaser for a valuable consideration without notice. And we see no reason why such purchaser should be allowed to invoke the aid of the registry statute, to avoid a prior mortgage which has not been recorded, any more than the aid of the Chancery Court for his protection.

We express no opinion as to what we should decide, had the deed to the Bank, even though it contained no warranty, purported to convey the entire title to the premises, instead merely of that which the grantor had. But we desire to limit our opinion to the facts of the case before us, lest parties should be misled as to the extent of it.

The case of the Ohio Life Insurance and Trust Co. v. Ledyard, 8 Ala. 866, does not in any way militate against the view which we have above expressed. In that case, the fourth head note is well calculated to mislead, unless taken in connection with that which precedes it. It is there said, that, “ one who purchases at a sale made by order of a court of chancery, foreclosing a mortgage, without notice of a prior unregistered deed, is a purchaser for a valuable consideration within the meaning of our registry acts.” So reads the fourth head note. But suppose the mortgage had been merely upon a term of six months, or upon the equity of redemption under the prior mortgage, and the decree had ordered a sale only of this interest, it is clear the purchaser under the master’s sale, taking only the interest of the mortgagor, would stand in no better condition than the mortgagor himself, and be bound by the prior mortgage, since he would have acquired no title inconsistent with it. In the case, however, just cited, the purchaser succeeded to the right of the trustee and cestuis que trust, who were protected as bona fide purchasers without notice of Ledyai’d’s mortgage, and, thus considered, it is clear the purchaser under the decree was protected. The third head note, which explains the fourth, shows how the purchaser was protected.

The view we have taken, renders it unnecesary to examine he other points raised.

After tbe best consideration we have been able to bestow upon this case, we are satisfied that the court mistook the law in several of the charges given. Its judgment must, therefore, be reversed, and the cause remanded.