Shirras & Others v. Caig & Mitchel

11 U.S. 34 (1812) 7 Cranch 34

ALEXANDER SHIRRAS, JOHN BLACK, WILLIAM MILLIGAN, WILLIAM BLACKLOCK, & JOSEPH VERREES,
v.
JOHN CAIG & ROBERT MITCHEL.

Supreme Court of United States.

February 13, 1812. February 17, 1812.

Absent ... . Washington, justice.

C. LEE, for Plaintiffs in error.^[*]

HARPER Contra.

All the Judges (except Washington, J.^[*]) being present.

MARSHALL, Ch. J. delivered the opinion of the Court as follows:

This is an appeal from a decree rendered by the Circuit Court for the district of Georgia.

Shirras and others, the Appellants, brought their bill to foreclose the equity of redemption on two lots lying in the town of Savannah, alledged to have been mortgage to them by Edwin Gairdner. The deed of mortgage is dated the first of December, 1801, and purports to be a conveyance from Edwin Gairdner and John Caig, by Edwin Gairdner his attorney in fact. Edwin Gairdner not appearing to have possessed any power to act for John Caig, the conveyance, as to him, is void, and could only pass that interest which was possessed by Gairdner himself. The Court will proceed to inquire what that interest was.

It appears that, on the 17th May, 1796, the premises were conveyed to James Gairdner, Edwin Gairdner and Robert Mitchel, merchants & co-partners of the city of Savannah.

In 1799, this partnership was dissolved; and, in December in the same year, James Gairdner made an entry on the books of the company charging this property to Edwin Gairdner & Co. of Charleston, at the price of 20,000 dollars. This firm consisted of Edwin Gairdner alone. James Gairdner also executed a power of attorney authorizing Edwin Gairdner to sell and convey his interest in this and other real property.

In March, 1801, a partnership was formed between Edwin Gairdner and John Caig to carry on trade in Savannah, under the firm of Edwin Gairdner & co.; and in the same month, Robert Mitchel conveyed his one third of the lots in question to Edwin Gairdner and John Caig.

About the same time it was agreed between the house at Charleston and that in Savannah to transfer the Savannah property to the firm trading at that place; and entries to that effect were made in the books of both companies; and possession was delivered to Edwin Gairdner and Co. of Savannah.

Such was the state of title in December, 1801, when the deed of mortgage bears date.

The Plaintiffs claim the whole property, or, if not the whole, five sixths; because they suppose Edwin Gairdner to have been equitably entitled to his own third, to that of James Gairdner, and to half of the third of Robert Mitchel. But for this claim the Court is of opinion that there can be no just pretension, because he did not affect to convey by virtue of the power from James Gairdner — he did not affect to pass the interest of James Gairdner, but to pass the estate of John Caig and himself. Consequently the power of attorney may, be put out of the case, and the conveyance could only operate on his own legal or equitable interest.

In law, he was seized under the original deed, and the deed from Robert Mitchel of one undivided moiety of the property.

Under the various agreements and entries on the books of the firms at Charleston and Savannah which have been stated, his equitable interest was precisely equal to his legal interest. In law and equity he held one moiety of the premises in question. The other moiety was in John Caig. To one sixth Caig was legally entitled by the conveyance from Robert Mitchel, and to two sixths he was equitably entitled by the agreement with Edwin Gairdner and the consequent entries on the books.

Of the equitable interest of John Caig the mortgagees were bound to take notice, because the purchaser of an equitable interest, purchases at his peril, and acquires the property burdened with every prior equity charged upon it, because the deed itself gives notice of Caig's title, and because Caig was in possession of the property.

The mortgage deed of December, 1801, could not, then, in law or equity, pass more than one moiety of the property it mentions.

A question arises on the face of the deed respecting the extent of the property comprehended in it. The Plaintiff's contend that both lots are within the description; the Defendants that only the wharf lot is conveyed.

The property conveyed is thus described — "All that "lot of land, houses and wharfs in the city of Savannah "as is particularly described by the annexed plat, and "is generally known by the name of Gairdner's wharf."

The plat was not annexed, nor was it recorded with the deed. It is, however, filed as an exhibit in the cause, and appears to be a plat of part of the town of Savannah, including the lot on which Gairdner's wharf was, and also one other lot belonging to the same persons, which was designated as No. 6, and which does not adjoin the property on which the wharves are erected.

The words descriptive of the property intended to be conveyed do not appear to the Court to be applicable to more than the wharf lot. The word "lot" is in the singular number; the term "houses" is satisfied by the fact that there are houses on the wharf lot; and there is no evidence in the cause, nor any reason to believe that lot No. 6 was "generally known "by the name of Gairdner's wharf." The Court, therefore, cannot consider that lot as comprehended within the conveyance.

The mortgaged property is in possession of the Defendants, Caig and Mitchel, who derive their title thereto in the following manner.

On the 7th of January, 1802, a new partnership was formed between Gairdner, Caig and Mitchel, and, by the articles of co-partnery, which are under seal, the Savannah property is declared to be stock in trade, and an entry was made on the books of the old firm transferring this property to the new concern. On the 12th of the same month, the co-partnership of Gairdner and Caig was dissolved.

On the 27th of July, 1802, by deeds properly executed, one third of the property became vested in John Caig, and one other third in Robert Mitchel.

On the 3d of November, 1802, Edwin Gairdner became a bankrupt; and this bill is brought by his mortgagees and assignees.

The claim to foreclose is resisted by Caig and Mitchel, because, they say,

1st. The mortgage was not executed at the time it bears date, but long afterwards, and on the eve of bankruptcy.

2d. That the transaction is not bona fide, there being no real debt, nor any money actually advanced by the mortgagees.

3d. That the mortgage was kept secret, instead of being committed to record.

4th. That the whole transaction is totally variant from that stated in the deed.

They therefore claim the property for the creditors of Gairdner, Caig and Mitchel.

1st. From the testimony in the cause it appears that the deed, if not executed on the day, was executed about the day of its date; and that Gairdner, at the time, was believed to be solvent.

2d. It appears, also, that the mortgage was executed, in part, to secure the payment of money actually due at the time, and, in part, to secure sums to be advanced, and to indemnify some of the mortgagees for liabilities to be incurred.

3d. The mortgage is dated the 1st of December, 1801, and was recorded in September, 1802.

By the laws of Georgia, a deed is valid if recorded within twelve months; but any deed recorded within ten days after its execution takes preference of deeds not recorded within that time, or previously on the record.

It appears to the Court, that neither negligence, nor that fraud which is inferred from the mere fact of omitting to place a deed on record, can, with propriety, be imputed to the person who has used all the dispatch which the law requires. If subsequent purchasers without notice, sustain an injury within the time allowed for recording a deed, the injury is to be ascribed to the law, not to the individual who has complied with its requisition.

In this case the subsequent purchasers might have proceeded to record their deeds within ten days, and have thereby obtained the preference they claim, but they have failed to do so. They are themselves chargeable with the very negligence which they ascribe to their adversaries; and, were they to be preferred, the Court would invert the well established rule of law, and postpone, under similar circumstances, a prior to a subsequent deed.

4th. It is true that the real transaction does not appear on the face of the mortgage. The deed purports to secure a debt of 30,000l. sterling due to all the mortgagees. It was really intended to secure different sums, due at the time from particular mortgagees, advances afterwards to be made, and liabilities to be incurred to an uncertain amount.

It is not to be denied, that a deed, which misrepresents the transaction it recites, and the consideration on which it is executed, is liable to suspicion. It must sustain a rigorous examination. It is, certainly, always advisable fairly and plainly to state the truth.

But if, upon investigation, the real transaction shall appear to be fair, though somewhat variant from that which is described, it would seem to be unjust and unprecedented to deprive the person claiming under the deed, of his real equitable rights, unless it be in favor of a person who has been, in fact, injured and deceived by the misrepresentation.

That cannot have happened in the present case.

There is the less reason for imputing blame to the mortgagees, in this case, because the deed was prepared by the mortgagor himself, and executed without being inspected by them, so far as appears in the case.

It is, then, the opinion of the Court that the Plaintiffs, Shirras and others, have a just title, under their mortgage deed, to subject one moiety of the lot, or parcel of ground, commonly known by the name of Gairdner's Wharf, to the payment of the debts still remaining due to them, which were either due at the date of the mortgage, or were afterwards contracted upon its faith, either by advances actually made or incurred prior to the receipt of actual notice of the subsequent title of the Defendants, Caig and Mitchel; and that the decree of the Circuit Court of Georgia, so far as it is inconsistent with this opinion, ought to be reversed.

The following is the decree of this Court.

This cause came on to be heard on the transcript of the record, and was argued by counsel. On consideration whereof, it is the opinion of this Court, that the deed of mortgage in the proceedings mentioned, and dated on the 1st of December, 1801, is, in law, a valid conveyance of one moiety of that lot of land, houses and Wharves in the City of Savannah, which was generally known by the name of Gairdner's Wharf, being the parcel of ground lying between the river and the street, and that the mortgagees in the said deed mentioned, are entitled to foreclose the equity of redemption in the said mortgaged property, and to obtain a sale thereof, and to apply the proceeds of the said sale to the payment of what remains unsatisfied of their respective debts, which were either due at the date of the mortgage, or have been since contracted, either on account of monies advanced, or liabilities incurred prior to their receiving actual notice of the title of the Defendants, John Caig, and Robert Mitchel. And the decree of the Circuit Court for the District of Georgia, so far as it is inconsistent with this opinion, is reversed and annulled, and in all other things is affirmed; and the cause is remanded to the said Circuit Court for the District of Georgia, that further proceedings may be had therein according to equity.

NOTES

[*] When this case was called, and before it was opened, C. Lee suggested, that it would be desirable to wait for a fuller Court, as the Judge who rendered the decree might think proper to retire from the bench.

Livingston, J. That practice has been abandoned.

Johnson, J. We have agreed among ourselves, not to excuse the Judge who passed the decree.

[*] JUDGE WASHINGTON was prevented by indisposition, from attending on the 13th, 14th, 15th, 17th and 18th of February.