Overall v. Taylor , 99 Ala. 12 ( 1892 )

McCLELLAN, J.

It is not necessary to a decision of this case that we should undertake to arrive at the truth between the witnesses Byrne and Charles B. Miller, as to whether the former informed the latter before the execution of the mortgage, under which Thomas P. Miller & Co. claim to be bona fide purchasers without notice of the land involved here, that no part of the purchase-money therefor had been paid and that Taylor, Byrne’s vendor, had a lien on the land for its payment. That inquiry aside, it is most clear from the testimony of Charles B. Miller himself that he, and of consequence the firm of Thomas P. Miller & Co., for which he was. acting and of which he was a member, had notice, at and before the execution of the mortgage, that a part, at least, of the purchase-money which Byrne had agreed to pay Taylor for the land in question had not been paid. Knowledge on the part of Miller & Co. of this fact put upon them the duty of inquiry which, if diligently prosecuted, we can not doubt would have led to the discovery, first, that no part of the purchase-money had been paid, and, second, that Taylor retained a vendor’s lien on the land for the full amount of the agreed price; and it follows that Miller & Co. must be held to notice of Taylor’s lien at the time they claim to -have purchased without said notice. Lomax v. La Grand, 60 Ala. 537; Feaster, Neville & Co. v. Stallworth et al., 62 Ala. 547; Taylor v. A. & M. Ass’n., 68 Ala. 229; Rosette v. Wynn, 73 Ala. 146; Webb v. Robbins, 77 Ala. 176; Woodall v. Kelly, 85 Ala. 368; Thompson v. Sheppard, 85 Ala. 611.

The fact, if it be one, that Byrne assured Miller & Co. that his vendor had no mortgage or lien on the land to secure the payment of the purchase-money did not relieve them from this duty of further inquiry, nor change in any degree the legal results flowing from its omissiori. Byrne’s deed was notice to them of the identity of his vendor, and the inquiry should have been made of him. No inquiry from Byrne alone nor information given by him in denial of the existence of a lien would meet the requirements of the rule, he being interested adversely to the lien.—2 Pom. Eq. Jur. § 601; Simpson & Hall v. Hinson, 88 Ala. 527; Manasses v. Dent, 89 Ala. 565; Weil v. McWhorter, 94 Ala. 540; 10 So. Rep. 131.

The judgment recovered by Camors & Co. against Byrne and another, the issuance of execution thereon, the levy thereunder on the land in controversy, the sale of the same, and its purchase by the plaintiffs in that action all occurred after the execution of the mortgage by Byrne and others to Miller & Co. This mortgage carried the legal title into Miller & Co., and left in Byrne only the right to reinvest himself with the title by meeting the conditions of the mortgage —the equity of redemption and nothing more. This equitable estate alone could have been and was levied upon and sold under the judgment of Camors & Co., and they acquired only this equity in the land. To this equity, the claim of Taylor for unpaid purchase-money was prior in point of time. On this state of the case Camors & Co. were not entitled to protection against Taylor’s lien as bona fide purchasers without notice, and this, wholly regardless of the fact that they had no knowledge or notice whatever of the existence of such lien. One essential factor in their right to protection against the latent 'equity of Taylor is lacking, in that they did not acquire the legal title by their-purchase at the marshal’s sale. Without this they had a' mere equity which, being subsequent in point of time to Taylor’s, is subordinate to the lien for purchase-money, “The whole principle on which protection is afforded a bona fide purchaser,” said Brickell, 0. J., “proceeds on the substantial reason, that by parting with a valuable consideration he has acquired an equity equal in dignity to the outstanding equity of which he has no notice. As a mere equity, that he acquires must be subordinate to older equities, but annexed to it is the legal estate, and it is the legal estate which gives him precedence. In Hinds v. Vattier, 7 Pet. 271, C. J. Marshall said: ‘The rules respecting a purchaser without notice are framed for the protection of liim who purchases a legal estate, and pays the purchase-money without knowledge of an outstanding equity. They do not protect a person who acquires no semblance of title. They apply fully only to the purchaser of the legal estate. Even the purchaser of an equity is bound to take notice of of any prior equity.’”—Shorter v. Frazer, 64 Ala. 74. And the same doctrine is declared in the following cases: Craft v. Russell, 67 Ala. 9; Hooper v. Strahan, 71 Ala. 75; May v. Wilkinson, 76 Ala. 543; State v. Connor, 69 Ala. 212.

Our conclusion that Camors & Co. were not entitled to protection as bona fide purchasers without notice might probably be rested on other grounds as well as that stated, hut that one will suffice for a decision of the case. Camors & Co., therefore, held this equity of redemption precisely as Byrne had held it — subordinate to Taylor’s vendor’s lien; and it was this inferior equity alone which Miller acquired from them; and, in their hands, it can no more aid their defense of bona fide purchase without notice than had they taken an absolute deed from Byrne in the first instance with notice of the lien, or had cut off, and thus acquired, by foreclosure Byrne’s equity of redemption having had notice of the lien when the mortgage was taken. Indeed, it is not conceivable how the position of Miller & Co. could in anywise be helped by drawing to their legal title, which was itself subordinate to Taylor’s lien, because of their knowledge of the lien, an equity which was secondary to the complainant’s, regardless of notice vel non. They, in other words, had no rights against the complainant by reason of their legal title, and that title may, therefore, be left out of view ; and they had no rights against him on their purchase from Camors & Co., because they acquired a mere inferior equity thereby, and because also they took that with notice of complainant’s dominant equity.

The claim of Timney to protection as a bona fide purchaser without notice is equally without merit. ' The evidence shows that the land was purchased by Byrne from Taylor as a member of and for the firm of Timney, Riley & Co., of which both Byrne and respondent Timney were members, and tbat it became the assets of tbat firm. Each member of tbat partnership is, therefore, chargeable with notice of the non-payment of the purchase-money, and the retention of a lien therefor by Taylor. — 17 Am. & Eng. Encyc. of Law, pp. 1080-1083.

The claim of Mrs. Timney is not insisted on in argument. As was said by the chancellor, nothing material is offered in support of her alleged interest; and there was no error in disallowing her claim to protection.

The decree of the Chancery Court is affirmed.