American Savings Bank v. Eisminger

Mr. Chief Justice Shepard

delivered the opinion of the Court:

The general equitable doctrine in respect of the priority of judgment liens over previously acquired interests has been stated as follows: “Unless precluded by the terms of some statute expressly intended to change it, the rule has always prevailed that the equity under a trust or a contract in rem is superior to that under a judgment lien. The claimant under the contract in rem has an equity to the specific thing which binds the conscience of his grantor; whilst the judgment creditor, who has advanced nothing on the faith of the specific thing, is entitled only to that which his debtor really has at the time, or could honestly convey or encumber, — his beneficial interest, and nothing more.” Hume v. Riggs, 12 App. D. C. 355—367; and authorities cited.

In this case, it will be remembered that the purchase money of the entire tract, of which a part is involved, was advanced by certain members of a syndicate, and tbe deed therefor, absolute upon its face, was executed to Robinson and Trimmer. . By a secret agreement they were to subdivide and sell the land, making the conveyances, receiving the purchase money, and distributing 'the net proceeds. They subsequently conveyed the lot in controversy to the appellee, which deed he failed to record until nearly' four years from its date, and more than one year after the recovery of appellants’ judgment against Robinson. There was no actual knowledge of the state of the title on the part of the appellants when their judgments were rendered, and apparently nothing to put them upon inquiry. Assuming that, in the absence of contrary statutory regulation, the judgment lien'would be subordinated to the equities of the syndicate beneficiaries and the title of appellee, it remains to consider the effect of certain provisions of the Code relating to the liens of judgments and the registration of deeds. Section 1214 [31 Stat. at L. 1381, chap. 854] of the Code provides that “every final judgment at common law * * * from the. date when the same shall be rendered * * * shall be a lien on all the freehold and leasehold estates, legal and equitable, of the defendants bound by said judgment ^ * * in any lands, tenements, or hereditaments in the District, whether such estates be in possession, or be reversions or remainders, vested or contingent.” Section 1082 [31 Stat. at L. 1359, chap. 854] provides for the levy of execution, among other things, “on all legal leasehold and freehold estates of the debtor in land.”

Sec. 499, relating to the taking effect of deeds, reads as follows: “Any deed conveying real property in the District, or interest therein, or declaring or limiting any use or trust thereof, executed and acknowledged and certified, as aforesaid, and delivered to the person in whose favor the same’is executed, shall be held to taire effect from the date of the delivery thereof, except that as to creditors and subsequent bona fide purchasers and mortgagors without notice of said deed, and others interested in said property, it shall only take effect from the time of its delivery to the recorder of deeds for record.” [As amended, 32 Stat. at L. 531, chap. 1329.]

The contention on behalf of the appellee is that the lien conferred by sec. 1214 is limited to the actual, real interest of the judgment debtor in the land, and is intended to be subordinate to all previously acquired interests of others, in accordance with the general equitable principle hereinbefore stated. In our opinion it is to be interpreted in the light of the general policy in respect of record notice of titles and interests, expressed in preceding sections, the purpose and effect of which are important in its efficient operation.

So interpreted, we think it must be declared to have extended the judgment lien to all lands held under apparently perfect legal title by the judgment debtor at the time of the rendition of judgment, notwithstanding the same might be subject to some secret trust, capable of being placed upon record. We say, trust capable of being placed upon record, for that is the case here. Whether a resulting or constructive trust, incapable of record, and in the assertion of which there has been no laches, would yield to the lien also, we intimate no opinion. An innocent purchaser for value from the holders of the legal title would, on general equitable principles, acquire that title discharged of the trust; and the same result would follow from the failure to record evidence of the trust by virtue of sec. 499, for, as has been well said by the court of appeals of Maryland: “No exception is made in the registry laws of instruments creating trusts; and if there was, a wide door would be opened for the perpetration of abuses and frauds, which those laws have been expressly devised to prevent, and which must be.enforced and upheld so as to effect the purpose of their enactment.” Hoffman v. Gosnell, 75 Md. 577-592, 24 Atl. 28. See also Manogue v. Bryant, 15 App. D. C. 245-258. If the sale to the appellee had been made in violation of the trust, he, having no notice of the same, would nevertheless have taken a perfect title; and if he had acquired a lien of any kind by dealing in good faith with the record owners, it would take precedence of the undisclosed interests of others. In making judgments liens, without using any terms of limitation or qualification, it seems clear that they were intended to rank with contract liens-recorded in compliance with the statute. Sec. 1084 [31 Stát. at L. 1359, chap. 854], providing for levy of execution upon lands held under legal title, is likewise without qualification.

We are of the opinion, therefore, that the lien of- the appellants’ judgment attached to the land, to the extent of Robinson’s apparent title, and is superior to the equitable interests of the syndicate beneficiaries, of which the creditors had no notice when their judgments were rendered.

Those beneficiaries are not concerned, for their title passed, with their consent, to appellee by the deed of Robinson and Trimmer, several years before the judgments were rendered'. Appellee, therefore, is in the position of one who takes a conveyance of a complete legal and equitable title, and fails to record it until after judgment against his grantor. At any time within three years after its delivery, he could have recorded this deed and escaped all difficulty. Through misplaced confidence in Robinson, 'he failed to obtain record. Sec. 499 is a substantial re-enactment of an older statute, which had followed still older.ones of the same general character, and was intended to prevent the frauds and mischiefs that had attended the keeping secret of conveyances, trusts, mortgages, and liens froin creditors and subsequent purchasers. A simple system of record had been provided for giving notice to all the world, the failure to avail of which brings the grantees in all instruments under the provisions of sec. 499. It does not appear whether the indebtedness of Robinson, the record owner, accrued before or after his conveyance to the appellee; but that is immaterial, inasmuch as it ripened into judgments before the record of appellee’s deed.

Having no notice of any outstanding title or interest at that time, the lien of the judgment creditor became fixed, and is superior to such unrecorded title or interest. Hitz v. National Metropolitan Banlc, 111 U. S. 722-728, 28 L. ed. 577-579, 4 Sup. Ct. Rep. 613; Manogue v. Bryant, 15 App. D. C. 245-258. This case is one of great hardship to the appellee, who paid his money and took his title'in good faith; but is no greáter than that of any other, purchaser under similar circumstances, and is the necessary result of a statute declaring a sound rule of public policy that must be given effect. The hardship is worked not by the statute, but by the neglect of a party to avail himself of the simple means which the statutes provide for giving notice of titles and encumbrances.

For the reasons given, there was error in the decree removing the liens of the judgments as clouds upon appellee’s title, and as to appellants it will be reversed, with costs. The cause will be remanded for further proceedings not inconsistent with this opinion. . Reversed.