Vaughn v. Tracy

Leonard, Judge,

delivered the opinion of the court.

The question made by this case is, whether possession of real property under an unregistered déed, is actual notice to a subsequent purchaser, within the meaning of our registry acts.

In order that we may put a correct interpretation upon these words, it may not be improper to refer to the state of the law upon this subject when the act was passed. The words of the lawgiver tacitly refer to the circumstances by which he is surrounded, and we must read them in connection with those circumstances, in order to put a sensible construction upon them. After courts of equity had established their jurisdiction in enforcing the specific performance of contracts for the purchase *418 of real property, they did not content themselves with administering a mere personal equity against the seller, but went yet further, and recognized not only the personal obligation on the part of the seller to transfer the legal title, but an interest in the buyer in the land sold, constituting an equitable ownership on his part, as contradistinguished from the legal ownership which remained in the seller. When, therefore, a contest arose between these two species of ownership for superiority, the courts laid down the principle that the latter should give way to the former, except in the hands of a purchaser for value without notice. The effect of this was, that a valid contract of purchase bound not only the seller, but also the land — not only in the hands of himself and of his heirs, and voluntary grantees, but also in the hands of a purchaser for value, whose conscience was affected by notice of the existing equitable right of the first purchaser. Now as it is a rule not only of morals, but also of public policy, that every one should use his own property, and conduct his own affairs, with proper prudence, so as not to hurt his neighbor, and that those who should fail to do so ought to answer for any damage they might occasion, the courts held that the equitable ownership should prevail, not only against a purchaser with actual notice, but also against one who bought under such circumstances as would have afforded him notice had he used proper care in making the purchase, and the distinction was thus made in English equity between actual and implied notice. The former was actual knowledge or information ; and the latter, facts and circumstances, not amounting to knowledge or information, from which the law conclusively presumed notice, and which it would not allow to be contradicted by contrary evidence. Actual notice, like any other fact, might be proved by direct evidence, or inferred from the facts and circumstances of the transaction ; but however proved, whether by direct evidence, or inferred from other facts, it was actual notice, and clearly distinguishable from implied notice, which was the notice the law imputed to a party under certain circumstances, and which it would not *419 allow to be contradicted, no matter how the fact might be ; in other words, implied notice seems to be a “ presumptio juris et jure” grounded upon the facts and circumstances relied upon for that purpose. (2 Sug. on Vendors, 278 ; Plumbe v. Flintt, 2 Anst. 438 ; Kennedy v. Green, 3 My. & K. and 2 Lead, cases in Eq. 99.) We remark here, that in England it was always held to be a want of proper care to buy from one out of .possession, without inquiring into the cause of it, and an averment that the seller was in possession was essential in a plea of a purchase for a valuable consideration without notice. (Jackson v. Rowe, 4 Russ. 514, and cases there referred to.) And, therefore, if the land sold were in the occupation of another, and the buyer neglected to inquire into the title of the possessor, the law, from this circumstance, conclusively imputed to him notice of whatever title the party in possession had, because, if he had inquired, as it was considered his duty to have done, he would have obtained this information, and all injury to the party would have been avoided. When the registry acts first came under the consideration of the English court of equity, they applied their own principles to them ; and while they admitted that the legal title was bound by the words of the statute, and that the unregistered deed was therefore void at law as against the subsequent registered deed, they held that, if the second purchaser bought with notice of the prior sale, so that his conscience was affected, the land, the sale of which was sufficiently shown by’ the unregistered deed, became bound in equity in his hands, and thus the unregistered deed finally prevailed over the subsequent registered deed with notice, by the aid of the court of chancery ; and the court, at the same time, applied to the case their own doctrine of implied notice, at least whenever the facts and circumstances were so gross as to affect the purchaser with fraud, and a purchase from one of land in the possession of another was always considered of that character. (Le Neve v. Le Neve, 3 Atk. 646.)

The first registry acts in America merely declared the unregistered deed void; in the New England states, generally, *420 without specifying the persons in whose favor they were to be void; but in New York, against subsequent bona fide purchasers only. In New England, where there was no distinct system of equity, the law courts, by an equitable construction of the statute, declared an unregistered deed to be void only against persons subsequently taking a specific interest in the land for value, without notice, and, in this manner, furnished relief to a party holding under an unregistered deed, similar to the relief given by English equity.

In New York, under their statute, the question, who are bona fide purchasers ? became a question of law, and the rules of English equity in reference to actual and implied notice, became rules of law, and were administered in the law courts. (Tuttle v. Jackson, 6 Wend. 213 .) In recent revisions of their statute law, several of the states have incorporated this principle of equity into their registry laws, by declaring “ that any unregistered deed shall not be valid, except against a party with notice and in the Massachusetts and Maine revised statutes, the expression is “ actual notice.”

Our original act, passed in October, 1804, (1 Terr. Laws, 46,) declared, “ that the unrecorded deed should be void against a subsequent purchaser for a valuable consideration but in the revision, in 1825, the provision was, that it should not be binding “ except between the parties and such as have actual notice,” and it has so continued ever since ; and now the question is, as already stated, whether possession is actual notice within the meaning of the act ? We think the legislature here referred to actual notice, as contradistinguished from implied notice, both of which were well known terms in our law when the act was passed; and we all concur in reversing the present judgment upon the ground that possession is not, as the Circuit Court seemed to suppose, as a mere matter of law, actual notice within the meaning of our recording acts. 'The case must, therefore, be remanded to be retried, and we defer, until all the circumstances of the transaction shall be developed upon this new trial, our opinion upon the question how far *421 and under what circumstances the fact of the open and noto/rious possession and apparent ownership of real property is to be considered evidence of actual notice, so as to bring a second purchaser within the provision of the statute, and to avoid his deed as far as it may conflict with the prior unrecorded deed under which this possession is held.

Speaking alone for myself, I may be allowed to state my present views of the subject, without, however, committing myself to any settled opinion. In all the states, under the recording acts, as they were originally expressed, possession was always considered either as implied notice of the unregistered deed, not to be contradicted, or as evidence of the fact of notice, to be submitted to the triers of the fact, and which might therefore be met and repelled by contrary evidence. It has, however, been recently held in Massachusetts, (Pomeroy v. Stevens, 11 Mass. 244 ,) that possession is not evidence of notice to be submitted to the jury, without other evidence showing that the party against whom it is offered knew or imputed such possession to a title in fee, or some higher right than that of mere occupancy, although the previous decisions, both in Massachusetts and Maine, seemed to be that the statute had not changed the existing law, but only incorporated in it the principle previously acted upon (Curtis v. Mundy, 3 Mass. 405 ) ; and there can be no doubt but that, previously, possession in both these states had always been considered at least competent evidence to go to a jury upon the question whether the party had notice of a prior deed. (Per Wilde, justice, in McMehan v. Grilling, 3 Pick. 155 ; Matthews v. Demerit, 22 Maine, 312.) Actual notice, under the Statute, is a fact, and of course may be proved as any fact; and as men rarely purchase houses to live in, or improved farms to reside upon, without a personal examination, when it is within their power, it seems to me that the fact of possession may, under ordinary circumstances, be fairly presumed to have been within the purchaser’s knowledge at the time hp bought'. The notice required by the statute is not certain knowledge, but such information as *422 men generally act upon in the transactions of life. (Curtis v. Mundy, 3 Met. 405 .) And, in our state, where the land is generally in the occupation o£ the owners in fee, it would seem that,r if knowledge is brought home to the purchaser that a third person is in the possession and apparent ownership of the land, it ought, under ordinary circumstances, to be deemed sufficient information to the second purchaser that the possessor is the owner in fee, under a title derived from the former owner. It is true, the circumstances may be such as to show conclusively that the purchaser did not, in fact, know that any one was in possession, or if he did know it, the possessor may have disclaimed the ownership ; and, in such cases, the jury, of course, could not find the fact of actual notice. It is quite a mistake to suppose, because the statute requires actual notice, that therefore it can only be proved by direct evidence. The actual notice, the fact to be proved, is the matter prescribed by the statute ; the competency of the evidence is another thing to be settled by the courts, according to the ordinary rules of evidence ; and the sufficiency of the evidence to establish the fact, is yet another question, which is submitted to the jury and must be passed upon by them.

The judgment is reversed, and the cause remanded.