Neal v. Kerrs & Hope
Neal v. Kerrs & Hope
Opinion of the Court
delivering die opinion.
On the 20th day of January, 1838, Jeptha Y. George executed a mortgage on Nelson, a negro fellow, to James Neal, to secure the payment of a promissory note for $2500, which was recorded on the sixth day of July of the same year. On the' eighth day of April, 1842, James Neal foreclosed his mortgage and caused an execution to issue thereon, which, on the 27th day of September, 1844, was levied on Nelson, and on the first Tuesday in, February thereafter, said slave was sold for the sum of $890.
On the 6th day of November, 1840, the said George made and delivered to Kerrs and Hope, his note for $1716 94, and on the 14th day of April, 1841, executed his certain other note to Kerrs and Hope, for $816 67, which last note was credited with the sum of $264 35. On the 7th day of April, 1842, George made and delivered to Kerrs and Hope his deed of mortgage to secure the payment of the last named note, on Nelson and other property therein mentioned. This last mortgage was recorded on the day it was executed, and foreclosed the following day, and the mortgagee took out execution thereon.
Both mortgages were foreclosed on the same day. It was in proof, however, that the foreclosure of Kerrs and Hope was prior in point of time in that day. It was also in testimony that George gave notice to Kerrs and Hope of the existence of Neal’s mortgage on the same property before he executed the last mortgage to them.
It will be necessary to ascertain how the law stood prior to 1827; and what change was made by the act of that year.
By the common law, livery of seisin was necessary to pass a freehold estate. The object was to give notoriety to the transaction and thus prevent imposition. Afterwards lands became transferrable by bargain and sale, and the statute of uses, transferring the possession to the use, the ceremony of livery of seisin was dispensed with, and subsequent creditors and purchasers were liable to be injured for want of publicity in the change of the ownership,of property. To remedy this mischief and to prevent clandestine conveyances, it was enacted by the 27 Hen. VIII. that
And why should it not be l The whole design is to give notice to purchasers and creditors, so as to save them from being defrauded by conveyances of which they are ignorant. If they are notified, however, in any way, of the existence of these prior conveyances, the end of the law is accomplished, and they cannot complain.
Next followed the statute of 7th Q. Anne, the preamble to which recites in substance, “ That by different and secret ways of conveying lands, &c., such as are ill-disposed have it in their power to “ commit frauds, and frequently do so, by means whereof several “ persons have been undone in their purchases and mortgages by ■“prior and secret conveyances and fraudulent incumbrances.” Then comes the enacting clause which declares, “ That every un- “ registered conveyance shall be adjudged fraudulent and void “against any subsequent purchaser or mortgagee for valuable con- “ sideration, unless the memorial thereof be recorded in the manner “ therein prescribed before the registering of the memorial of the “ deed, under which such subsequent purchaser or mortgagee “ shall claim.”
Under this Registry Act, it has always been assumed as a conceded point, that notice of the prior deed would supersede the effect of the prior registry. The case of Le Neve vs. Le Neve, already referred to, was decided by Lord Hardwicke, in 1747, and con-
The Chancellor next reviews the three leading cases which had been decided on the Register Act, namely, Forbes vs. (4 Nelson, Bro. P. C. 189,) Blades vs. Blades, (1 Eq. Ca. abr. 358,) and Chevall vs. Nicholls, (1 Str. 564,) and concludes that the ground upon which they all went was plainly this, that the taking a legal estate, after notice of a prior right, makes a person a mala fide purchaser. That it is a species of fraud and dolus malus itself. For he knew the first purchaser had the clear right of the estate, and after knowing that, he takes away the right of another person by getting the legal estate. Fraud or mala fides, therefore, is the ground on which the Courtis governed in the cases of notice.
In the case of Blades vs. Blades, (1 Eq. Ca. abr. 358,) Lord King (who Lord Hardwicke has pronounced as great a stickler for the common law as ever sat in Westminster Hall) declares, “ The subsequent piirchaser having notice of the first purchase, was bound by it, though not registered, and his getting his own deed first registered was a fraud. The design of these acts being only to give parties notice, who might otherwise without such registry, be in danger of being imposed on by a prior purchase or
By 4 and 5, TV. Sf M., it is provided that “no judgment not docketed and entered'in the book directed to be provided and kept for that purpose, shall affect any lands and tenements as to purchasers and mortgagees, yet the doctrine of notice has been held by the Courts, applicable to this statute, by analogy to the Registry Act. 2 Eq. Ca. abr. Thomas vs. Pledwell, 16 Ves. 419.
Our colonial Act of 1755, it will be recollected, was passed just eight years after the decision of Lord Chancellor Hardwicke, in Le Neve vs. Le Neve. It cannot be doubted that the doctrines of this case were known to the Provincial Legislature; and that the same reasons, which induced the enactment of the Statute of Enrolment, the Registry Act, and the Act of W. and M., caused the introduction of our Statute. By it, all mortgages and other conveyances were to be registered, within the space of sixty days from their dates; on failure of which all such as are lawfully and regularly recorded, within the time directed by the Statute, were to be deemed, taken and construed to be prior, and were to take place and be recoverable in law, before any deed, conveyance or mortgage which had not been duly registered. Prince, 158.
Could language be more explicit, as to the preference given to the legal estate of the junior incumbrancer? And yet it never was supposed by any Court in Georgia, but that this Act must have the same construction, put upon the Registry Acts of Eng
It is insisted by counsel for the defendants in error, that no evidence of notice dehors the statute,, can be received, because the only competent notice is the registration of the deed. And this is trae, so far as the legal title is involved ; but the equitable title of the unrecorded mortgagee may be communicated in any other way, and this knowledge, however obtained, is binding on the junior mortgagee.
The Registry Acts of almost every State in the Union, are similar in substance to our own; and their Courts have with great unanimity adopted the same rule maintained here for nearly a century, holding that an unregistered deed is good against a subsequent conveyance with notice — notice being equivalent to regr istration. 5 Greenl. 369. 4 New Hamp. Rep. 262. 2 Verm. Rep. 13. 5 Con. Rep. 468. 14 Mass. Rep. 300. 19 Wend. Rep. 339. 1 Paige, 127. 3 Ham. 527. 1 Breese, 34. 16 Martin’s Lou.R. 368. 10 Watts, 412. Walher’s Rep. 168. 2 Harris fy G. 415. 1 Dev. Rq. Rep. 110. 4 Iialst. 193. Harper, 295. 4 J. J. Marsh, 293. 3 Leigh, 365.
Many of the cases here cited, and others which I have examined, are parallel in every particular with the one at bar, and they all hold the same language, to-wit: that a subsequent incumbran-cer mala fide, (which means with notice,) is not within the purview of the law, nor intended to be protected; for the law never intends to give sanction to fraud, or to render a fraudulent act legal.
Chancellor Kent, after noticing the French Ordinance of 1747, framed by d’Aguesseau, and which laid it down as a fixed rule> that not even the most actual and direct notice would countervail
"Was the act of 1827 designed to introduce some new element into this well-established principle of equity ? The second section requires mortgages to be recorded within three months from their date, instead of sixty days. The fourth section provides “thatupon failure to record any mortgage as therein required, within the “ time specified for recording the same, in such case all judg- “ ments obtained before the foreclosure of said mortgage, and also- “ any mortgage executed after the same and duly recorded, shall “ take lien on the said mortgaged property, in preference to the- “ said mortgage.”
Is there anything in the words of this statute which indicates-an intention in the Legislature to change the old law as to mortgage ? We do not perceive it. The terms of it are precisely the-same, in substance, with its predecessor. And it is to he presumed that the General Assembly were familiar with the construction of the Courts, both in England and in this State, upon the language1 used in the act. Had any alteration been intended, some suitable' expression would have been employed for that purpose. The-preference given to the junior incumbrancer would have been absolute, with or without notice — thus negativing the right of the1 Courts to interfere on the ground of fraud.
Does this construction make void the law? By no means. Some rule had to be prescribed by the Legislature, where there
It may be asked, Why apply notice to the junior mortgagee, and not to the judgment creditor, seeing that these two classes are placed in juxtaposition in the statute Í It is this circumstance alone, I apprehend, which creates the difficulty in the case. For had judgments been omitted, we do not perceive that the 4th section of the Act of 1827 would have introduced the slightest innovation upon the old law.
In the first place, it may be remarked that we are not now called on to construe this act in reference to judgments. Conceding, however, that they cannot be affected by notice actual or constructive, there may be a good reason for the distinction. A judgment is the act of the Court, where fraud cannot be alleged ' — and here the Legislature have made the priority of lien to depend upon the priority of judgment — that is, the judgment of foreclosure and the ordinary judgment; but the taking the younger mortgage is the act of the party, and it is not only viewed as done in bad faith, when attended with notice, but the Courts have ever branded it with the epithet of dolus malm — a, wicked trick !—
But again — both a judgment and mortgage differ materially in this State and in England. All the property of the defendant here Is bound from the date of the judgment, and subject to be sold under execution for the payment of the judgment debt. On the other hand, a mortgage here conveys no title to the mortgagee, and is simply a security for the debt. M treating, then, of the effects of judgments and mortgages, we cannot apply to them always the principles of the Common Law. Inasmuch, then, asad estate passes in cases of mortgage, a judgment by ordinary suit as given the preference over unrecorded mortgages, unless the latter be foreclosed first. But I forbear to pursue this argument, for I am not prepared to say that the lien of a judgment obtained with notice is not subject to the equity of a mortgage, though not recorded as required by the statute. Numerous adjudications can be adduced in support of the position that an absolute conveyance to a purchaser, though not recorded within the time prescribed, transfers the title to lands, free of subsequent judgments.
There is nothing novel in the principle which we are about to establish. By the statute of Frauds, no contract for the sale of lands can be enforced unless some memorandum or note thereof be in writing, signed by the party to be charged therewith, yet no doctrine is better established than that the specific performance of parol agreements will be decreed upon the ground of part performance. And the reason is, that the Courts will not permit a law which is passed to prevent frauds, to he used as an instrument of inflicting fraud.
It only remains to notice briefly one other point of the-case. It is whether the question of notice is not exclusively of chancery cognizance ? We think not. Courts of law have concurrent jurisdiction in cases of fraud; and the ground of interference in these cases of notice is the fraud. Chancellor Kent says, “ The' better opinion is in favor of the jurisdiction of Courts of law.” 4; Kent, 173. Courts of law have always acted upon this rule. 1 Burr. 474. Peake’s N. P. 190, 191. 3 Co. 77. The question is
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- James Neal and others, in error v. Kerrs and Hope, in error
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