W. C. Belcher Land Mortgage Co. v. Clark , 1922 Tex. App. LEXIS 445 ( 1922 )

By the deed from H. W. Byers and wife to J. M. Clark, the legal title to the land was vested in J. M. Clark, which afterwards passed to the W. C. Belcher Land Mortgage Company and from that Company to W. M. Brown, its assignee. The burden was upon the plaintiffs, the devisees of Mrs. F. C. Clark, deceased, to show notice of their equitable title to the mortgage company at the time of the execution to it of the deed of trust by J. M. Clark, since their title was an equitable title only. Hill v. Moore, 62 Tex. 610; Johnson v. Newman, 43 Tex. 628; Biggerstaff v. Murphy,3 Tex. Civ. App. 363, 22 S.W. 768; Hicks v. Hicks (Tex. Civ. App.)26 S.W. 227; Barnes v. Jamison, 24 Tex. 362; Saunders v. Isbell,5 Tex. Civ. App. 513, 24 S.W. 307; Wallis v. DeHart (Tex. Civ. App.)108 S.W. 180; Dewees v. Nicholson (Tex. Civ. App.) 182 S.W. 396; Halbert v. De Bode, 15 Tex. Civ. App. 615, 40 S.W. 1011; Peterson v. McCauley (Tex. Civ. App.) 25 S.W. 826.

In the opinion of the writer, the probate proceedings in the county court, including the probating and recording of Mrs. F. C. Clark's will, was not constructive notice to the mortgage company. The will was a domestic, and not a foreign, will, and the statute requiring it to be recorded in the records of the probate court does not provide that such record shall be constructive notice of the contents of the will; nor does any other registration statute so provide. Such was the effect of the ruling in the following cases and no decisions contrary thereto have been pointed out by counsel for the appellees, nor otherwise discovered by this court. Allen v. Atchison, 26 Tex. 616; Davis v. Harmon, 9 Tex. Civ. App. 356, 29 S.W. 492.

In Davis v. Harmon, supra, this court, speaking through Associate Justice Head, said:

"It has been repeatedly decided that constructive notice by registration is a creature of the statute, and must be given according to its terms. Burnham v. Chandler, 15 Tex. 441; Webb on Record Title, § 135."

The agreed facts show that the mortgage company had no actual knowledge of the probate proceedings, and the only question is: Did it have constructive notice of the same?

But, even though the recording of Mrs. F. C. Clark's will in the probate records, and the showing in the inventory of her estate that the vendor's lien notes, executed by Byers and wife and mad payable to J. M. Clark, were in part the separate property of Mrs. Clark and were devised to her children, all had the same effect to operate as constructive notice to subsequent purchasers as if the will had been a foreign will and duly recorded in the deed records, or as if Mrs. Clark had executed a deed of conveyance to her children instead of devising it to them, and such deed had been duly recorded, yet neither such probate records nor the registration of the deed would have been constructive notice to the mortgage company because that company did not claim title through the devisees of Mrs. Clark, but claimed through a prior conveyance executed by her. This conclusion seems to be well settled by many decisions of this state. White v. McGregor, 92 Tex. 556, 50 S.W. 564, 71 Am. St. Rep. 875, was a controversy between Mrs. White and Mrs. McGregor, as assignee of one Evans, over title to land. Both parties claimed title through John Crum as the common source. The first link in Mrs. White's chain of title was a deed from John Crum to Jane Dickerson, his mother, dated April 23, 1884, and by consecutive deeds from different subsequent purchasers that title passed to Mrs. White. Mrs. McGregor was the devisee of the land under the will of Evans, who purchased the land at execution sale, under a judgment against John Crum, the sheriff's deed being dated August 4, 1884, more than a year later than the deed from Crum to Jane Dickerson. Each of those two deeds was recorded immediately after its execution. The deed to Mrs. White, which evidenced the title which she claimed, was executed December 22, 1892, more than seven years after the recording of the deed to Evans. The following excerpt from the opinion in that case presents the issues determined:

"According to the findings of the Court of Civil Appeals, the conveyance by John Crum to Mrs. Dickerson, his mother, was made with the intent to defraud his creditors. On the other hand, they found that when Mrs. White purchased she paid value for the land without actual notice of any adverse claim. The deed to Mrs. Dickerson recited a consideration of $200 and that it was paid.

"In determining the superiority of the respective titles, two questions present themselves: (1) Was the registration of the deed of the sheriff to Evans notice to Mrs. White, the plaintiff, of the existence of such deed? (2) and if so, should such constructive notice be deemed to give her notice also that the plaintiff in execution claimed that the deed from John Crum to his mother was fraudulent as to his creditors and therefore void?"

Both the questions so stated were answered in the negative, and therefore in favor of Mrs. White's title. And in discussing the first question the court, through Chief Justice Gaines, after citing many prior decisions sustaining the holding, said:

"The decisions of our court above cited establish a rule of property and we need not stop to inquire whether they are correct or not. The effect of the rule is to hold that practically article 4652 adds nothing to the law as it previously existed; and in determining the questions before us, we are brought back to the construction of article 4640. As to the matter in hand, the substance of that article is to declare a deed not duly recorded void as against subsequent purchasers for value without notice; and the question arises, what is meant by subsequent purchasers? Do the words mean all persons who purchase the land after the deed is recorded, or only those who are subsequent in the chain of title? If a grantor conveys the same property twice and the second grantee puts his deed upon record, is it notice to one who subsequently purchases from the first grantee? We think not. The record is not notice to the first grantee, for he is a prior purchaser. Nor do we think it was intended to be notice to any one who should purchase from him." (Articles 4652 and 4640 are now 6842 and 6824, respectively.)

See, also, Ramirez v. Smith, 94 Tex. 184, 59 S.W. 258; Holmes v. Buckner, 67 Tex. 107, 2 S.W. 452; Thompson v. Rust, 32 Tex. Civ. App. 443,74 S.W. 924 (writ of error denied); 23 R.C.L. p. 207, § 64.

The deed from J. M. Clark and wife to H. W. Byers and wife, subject to the vendor's lien notes therein noted, conveyed both the legal and equitable title to the land which had theretofore been the separate property of Mrs. Clark, which conveyance unquestionably was not affected by Mrs. Clark's will in favor of her children. And the same would have been true of the title of any assignee of Byers assuming payment of the vendor's lien notes to J. M. Clark. The legal title to that property was reconveyed to J. M. Clark, and the claim of the children to an equitable interest in it is based solely upon the fact that their mother owned a pro rata interest in the vendor's lien notes which Byers had executed to J. M. Clark in part consideration for the conveyance to Byers, and which were paid by Byers by his conveyance to J. M. Clark. That equity did not appear in the chain of title through which the mortgage company and its assignees and subsequent assignees claimed; and hence for that reason the company and its assignees were not chargeable with constructive notice of it.

The further contention that, independently of the question of constructive notice of the probate proceedings when the mortgage company took the deed of trust from J. M. Clark to secure the purchase money advanced with which to pay Byers, it had notice sufficient to put a reasonably prudent person on inquiry, which, if pursued, would have led to a discovery of the fact that Mrs. Clark's children owned an equitable interest in the land, is based solely upon notice of the following facts, appearing in the chain of J. M. Clark's title at the time: First, that a portion of the land conveyed to H. W. Byers and wife by J. M. Clark and wife was at the time of the conveyance the separate property of the wife; and, second, that the cancellation of the vendor's lien notes for $6,000 theretofore executed by Byers and wife to J. M. Clark was recited as part of the consideration of the conveyance from Byers and wife to J. M. Clark. As before noted, the burden was upon the claimants of that equitable interest in the land to show notice to the mortgage company of that equity; and the writer is of the opinion that the facts recited were not sufficient to discharge that burden.

In Eylar v. Eylar, 60 Tex. 315, a fictitious sale was made of the business homestead of J. F. Eylar to O. A. Eylar, the deed being duly executed and acknowledged by J. F. Eylar and wife and immediately placed of record. The deed recited a cash consideration of $500 paid, but, in fact, it was intended and understood between the parties thereto to be merely a mortgage to secure the payment of a debt which J. F. Eylar owed to O. A. Eylar. J. F. Eylar continued to occupy the property as his business homestead. Approximately six months after the deed was executed O. A. Eylar conveyed the property to Ann E. Eylar, who paid a valuable consideration and without actual knowledge of the fictitious character of the conveyance first mentioned. It was held that the continued possession of the property by J. F. Eylar as his place of business was not sufficient to put Mrs. Ann E. Eylar upon inquiry as to whether J. F. Eylar claimed title to the property, although, in discussing the case, the court referred to the general rule that possession is strong presumptive evidence of a claim of title.

The cases of Hurt v. Cooper, 63 Tex. 362, and Love v. Breedlove,75 Tex. 649, 13 S.W. 222, were also controversies between claimants of title to homestead property through fictitious conveyances of the same by husband and wife, made to borrow money thereon, such fictitious conveyances being duly acknowledged and recorded, and the husband and wife remaining in possession thereof. And in both of those cases, which followed the Eylar Case, it was held that such continuation of possession of the property for homestead purposes by the husband and wife was not notice of the fictitious character of the simulated sale, if the purchaser had no actual knowledge otherwise of such fact. In the case of Sanger Bros. v. Brooks, 101 Tex. 115, 105 S.W. 37, a husband and wife made a pretended sale of their homestead to a creditor, who at the same time reconveyed the property to the grantors, reserving a vendor's lien on the property to secure a note purporting to have been given as part of the consideration for the last conveyance. It was held that a purchaser of that note was chargeable with notice of the fictitious character of the conveyance executed by the husband and wife, by reason of the fact that that deed and the reconveyance to them by the grantee were executed contemporaneously. In the opinion written by Chief Justice Gaines, the cases of Eylar v. Eylar, Hurt v. Cooper, and Love v. Breedlove, supra, were all cited with implied approval, but they were distinguished from Sanger Bros. v. Brooks by reason of the fact that in that case the reconveyance was contemporaneous with the fictitious conveyance of the homestead, while in the other cases the reconveyances were executed several months subsequently. See, also, Stiles v. Japhet, 84 Tex. 91,19 S.W. 450; Mitchell v. Schofield, 106 Tex. 512, 171 S.W. 1121; Saunders v. Isbell, 5 Tex. Civ. App. 513, 24 S.W. 307; Smith v. Olsen,23 Tex. Civ. App. 458, 56 S.W. 568; Peterson v. McCauley (Tex. Civ. App.)25 S.W. 826; Wallis v. Dehart (Tex. Civ. App.) 108 S.W. 180; Armstrong v. Hix, 107 Tex. 194, 175 S.W. 430; Griggs v. Houston Oil Co. (Tex. Civ. App.) 213 S.W. 216.

For the reasons stated, the writer is of the opinion that the judgment of the trial court should be reversed, and judgment should be here rendered in favor of the appellants.