Smith v. Yule

By the Court, Rhodes, J.:

We have bestowed much attention upon this case since its reargument by the counsel for the defendant, for questions of the importance of those presented demand mature deliberation before a conclusion is reached. Our labors have not been lightened by the assistance of counsel for the opposite party— the plaintiff having failed to present us with points, authorities or argument. Questions, the decision of which involve consequences of such magnitude as do those arising in this case, ought to be fully discussed on both sides before they are decided. Of the defendants no complaint can be made, for their brief on reargument will not detract from the well earned reputation of its author, who was distinguished alike for his industry, his candor and his professional ability. Our former opinion must be modified in respect to some of the points passed upon, and the decision changed.

The Court below, we are satisfied, erred in finding that at the time of the execution of the mortgage by Simmons to Yule, Yule had notice of the unrecerded conveyance executed by Simmons to the plaintiff in 1856. The evidence shows, that shortly after the conveyance of the two blocks, in 1855, to the plaintiff and Simmons and their two associates in the purchase, the plaintiff and Simmons took possession of the blocks and occupied a small house that the four purchasers or some of them erected on one of the lots—the lot in controversy—and that they so continued in the occupation of the house and possession of the premises up to the time of the execution of the deed of Simmons to the plaintiff; and that from thence up to a time subsequent to the execution of the mortgage by Simmons to Yule they remained apparently in the same occupation and possession of the house and premises. At the date of the mortgage Simmons occupied one room and the plaintiff occupied the rest of the house, but there was nothing in the circumstances surrounding “the occupation, to indicate to a person looking at the premises that the occupation or possession of either was in any respect limited.

It having been shown that Simmons, at or about the date of his mortgage to Yule, in fact occupied a room in the house as a lodger, we proceeded, in our former opinion, to consider Simmons’ true relation to the premises, so far as the possession was concerned, as between him and the plaintiff, and to ascertain which of them was deemed in law to hold the possession. Upon further reflection, we are of opinion that this investigation cannot be legitimately entered into for the purpose of ascertaining whether the facts were sufficient to put the subsequent purchaser upon inquiry as to some right or title not appearing of record. It is said in Fair v. Stevenot, 29 Cal. 490, in entire harmony with the current of authority, that the open, notorious and exclusive possession of a purchaser holding under an unrecorded deed is sufficient to put a subsequent purchaser upon inquiry as to the title of the person in possession, and that notice of the unrecorded deed should be found from such possession, unless it appears that the inquiry has been diligently prosecuted, but without success. The doctrine of constructive notice, implied from possession, springs from the apparent—not the true—relation that the person in possession bears to the title. It proceeds upon the appearances and the presumptions arising therefrom. The person in possession is presumed to be rightfully so, and the subsequent purchaser finding a person in the apparent possession, is charged by the law with the duty of inquiring by what right or title he holds. The ground upon which the holder of the unrecorded conveyance is permitted to prevail over a subsequent purchaser, who has recorded his conveyance according to the statute, is that it was fraudulent in him to take and register a conveyance to the prejudice of the known title of another. And as fraud will not be presumed, but must be proven, the notice, whether actual or constructive, of the unrecorded conveyance, must be clearly shown before the exception established by the Courts to the Registration Act will be permitted to prevail.

Inquiry does not become a duty where the apparent possession is consistent with the title appearing of record. The subsequent purchaser cannot be said in such case to have either neglected or refused to make inquiry for a title not appearing of record, for none was suggested by the apparent possession, and therefore for his failure he cannot be adjudged guilty of a fraud. Where the vendor is in the apparent possession, the subsequent purchaser finding the title of record in the vendor, is put upon no further inquiry, because the possession appears to be according to the title; and if at the same time another person is also in possession, there is no presumption of title in him inconsistent with that found in the vendor. In Billington v. Welsh, 5 Bin. 132, the vendor sold by parol a part of a tract of land, and put the vendee in-possession, and retained possession of the remainder of the tract; and it was held that as there was nothing to distinguish the possession of the vendee from that of the vendor, it would not impart notice to the subsequent purchaser. The vendor had erected a forge, gristmill and sawmill, with a number of houses such as are usually connected with works of that kind, and the vendee had possession of only a small portion of land at no great distance from the iron works; and the Court thought that “it would naturally occur to a person noticing the forge, mills, and adjacent buildings and inclosures, that they all belonged to the proprietors of the works.”

This leads us to the only remaining point made by the defendants on the reargument that we shall notice. It is insisted that the possession of the first vendee must be not only open and notorious, but also exclusive. This appears to have been the view of this Court in all the later cases. (See Lestrade v. Barth, 19 Cal. 675; Dutton v. Warschauer, 21 Cal. 627; Fair v. Stevenot, 29 Cal. 486.) And the doctrine is very uniformly sustained by the current of authority. (McMechan v. Griffing, 3 Pick. 149; Kendall v. Lawrence, 22 Pick. 542; Hanrick v. Powell, 5 Binn. 132; Hewes v. Wiswell, 8 Greenleaf, 98; Butler v. Stevens, 26 Maine, 484; Le Neve v. Le Neve, 2 Lead. Cases in Eq.) The regret has often and justly been expressed that the plain rule of the statute was ever departed from, or that if any exception was made, it had not been confined to cases of actual notice brought directly home to the persons to be charged; but as it has been made to include notices implied from the possession of the prior purchasers, the remedy, if any is needed, is with the Legislature; but the Court will confine the exception to cases of open, notorious and exclusive possession—to the exclusion, at least, of the grantor. The' subsequent purchaser is not justly chargeable with fraud in failing to make inquiry for a prior unrecorded conveyance, unless there is some fact or circumstance apparent to his observation, calculated to excite the suspicion of a prudent man dealing with the property, that a prior conveyance had been made. The existence of such a conveyance would not be suggested by the possession of a third person, while the vendor held the title appearing of record, and was in the apparent possession.

Judgment reversed and cause remanded for a new trial.

Mr. Chief Justice Currey expressed no opinion.