14
FEDERAL REPORTER.
just held that 1 cannot' remartd it until the next session of this court, it must follow that I should decline to appoint commissioners as requested. The motions are denied.
MCCORMACK
v.
JAMES.
(Di8trict Oourt, W 1.
n. Virginia.
May 27, 188,6.)
Under U. S. equity rule No. 76, providing that masters' reports shall recite no part of any state of facts. etc.· nsed before them, but shall refer to and specify such state of as to Inform the court what state of facts was used, a commissioner's report need not state what facts he considers proved by the evidimce. SAME-SCOPE OF REFERENCE.
REPORT-STATEMENT OF FACTS.
2.
8.
A commissioner may al1<nv charges for improvements on real estate, although that matter was not embraced in the decree of reference, where the question is raised by the pleadings, and the parties examined witnesses as to th.e value of such improvements, and agreed to submit the same to arbitration, and the master adopted FIDE PURCHASER. .
MORTGAGES-DEEDS OF
Under Code Va. 1860,c. l(S, § 5; providing that every deed of trust of real estate shall be void as to creditors and subsequent. purchasers for a valuable consideration without notice, until it is admitted to record, a recorded deed of trJ]st of real estate is notice to a subsequent purchaser.
. Acertiticate of acknowledgment to a deed of trust certifyin. g that H, J., "whose name appears signed to, the within deed, came this day before me, R. C . W., acting justice for said county. and acknowledged the same to be ,his aatand deed. and desired me to certify the same to the clerk of the county coilrt of sludcounty. that it may be duly recorded," Is a substantial com, pliance with Code Va. 1860, c. 12i, 3, requiring such certificate to be to the following effect: "I, - - - , a justice of the peace in the county aforesaid. in the state of - - '-, do certify that - - , whose name is signed to the writing above. (or hereto annexed.) bearing date on the - - day of - - , hag a,cknowledjl;ed the same before me, in my county aforesaid, "-and is sufficient. . A beneficiary under a recorded deed of trust is not estopped from asserting hislie.n aeaga\Usta subsequent purchaser of the land by having merely been cognizp.ntof and participated in the negotiations culminating in a sale to such . . purcllaser. 1 . o
G.
SAME-RIGHTS' OF BENEFICIARy-ESTOPPEI.-IN PAIS.
In Equity. On exceptions to commissioner's report. Campbell & Trigg, Daniel Trigg, and Seldon Longley, for plaintiff. White&: Buch'a1ian, for defendant. PAUL,J. OIdhe 25tli day of April, 1861, Hansford James, of Smyth county, to James Ward a deed oftl'ustconveying to said Wll,rd a tract ofland lying in said county, to secure certain creditors J On the subject of'estoppel by conduct and declarations, see·McDowellv. Steel-Works, (m.)J,6,N'. E.. 1111<1 note; Guest v. Opera-House. Co.· (Iowa ) ag N. W. Rep.158. v. Sparks) meb.) 86 N'. W. nep. 875; Matthews v. VV'arner,311 :Fed. Rep. and note; 869'; Marrow v.' Btinli1ey; \Va.) 6 S. E. Rep. 605, ana note. .
}1'CORYACK
15
therein named,a preference being given to David E. James, to whom he owed one Lond of $2,226, and some other smaller amounts. This deed was duly admitted to record in the clerk's office of the county COllrt of Smyth county on the day of its execution, Apri125, 1861. In March, 1862, said. David E. James assigned his interest in said trust deed to Henry Horne; and inMay, 1863, the said Hansford James, the grantor in the deed of trust, sold the said tract of 280 acres of land to the plltintiff, Micajah McCormack, at the price of $7,500, in Confederate currency, of which .sum said McCormack paid cash $6,500, and executed his bond for $1,000, payable two years after date, the date being May 9, 1863. Said McCormack was put in possession of said land in the fall of 1863, and remained in possession thereof until June 24, 1870. On the 30th day of MlilY, 1868, the said Hansford James filed his petition in bankruptcy, and was adjudicated a bankrupt thereon. In his schedules in bankruptcy l!!ai\l Hansford James surrendered the said tract. of 280 acres of land on which the deed of trust to Ward was given, and which he had sold to McCormack in 1863; and i.n November, 1868,sl1id land was sold by G. J. Holbrook, the assignee in bankruptcy of said Hans. JQrd)ames, and at said sale David E. James, the preferred creditor in the deed of trust to Ward, became the purchaser at the price of $1,500. In November, 1868, Micajah McCormack filed his hill before Hon. JOHN C. UNDERWOOD, United States district judge forJhe district of Virginia, .praying for an injunction against the assignee of Hansford James, bank:rupt, and said DavidE. James,from further proceedings in said sale to .David E. James, and that a title be decreed to /laid McCormack for said land. On.the 9th of December, 1868, a restraining order was awarded, as prayed forin th/i bill. To this bill Hansford James, David E. James. and G. J.Holbrook, assignee in bankruptcy of Hansford James, filed tlwir answersibut on tbe 24th of November, 1869, the injunction granted pecember 9, 1868, was dissolved·. On the 24th of June, 1870, an order:was entered declaring David E. James entitled to the possession of said land, ·l,LQd ordering the ma,rshal to put him in possession thereof. By an order entered April 3, 1872, at RichqlOnd, the cause was removed . the court of Western district, at Abingdon. On a motion lI/-ade Noveml;>er 21" 1872, to reinstate the injunction, and for a rehearing, the bill was dismissed, with costs to the defendants. Noyember 28, 1874, McCormaclcfiled a bill of review, to which David E. James filed his answer, and oJlthe 12thdlty of Jupe, 1875, the decree of November 21, 1872, dismissing McCormack's bill, was reversed and annulled, and the injuncti\lD di/lsolved by order of November 24, 1869, was reinstated; the . /laIe madeb.y Holbrook, .assign,ee oJ Hansford Ja;rnes, bankrupt, to David and a writ ofpossession E ·.James awarded McCormack for the land. The ordElr says further: to ,the court that there is a lien asserted against said land by David E. James. which he Claims is prior in date 'to plaintiff's purchase, and .. that the lien is still sUbsistirig and vnlid;- and it further appearing that there is ,still of putchase;money due froDlthe, plaintiff, and that he claims to be entitled to rents and profits for the use of sll.ilt lm).ds dUrinl{tlletil:lle
16
that he has been dispossessed thereof,-it is ordered that be so amend his bill as to bring these matters, and any others hi may be advised, before this court. " In pursuance of this order, McCormack filed his amended and snpplemental bill, October I, 1875, to which the defendants David E. James and Hansford James filed their answers October 21, 1875. In the mean time, on the 19th of August, 1875, said David E. James filed his peti_tion, praying that the said Micajah McCormack be compelled to pay the debt of $2,225, secured in said deed of trust, due said James, and that said McCormack, W. O. Austin, deputy-marshal, their agents, etc., be · restrained from executing the writ of possession awarded McCormack by the decree of June 12, 1875. On this petition a restraining order was granted as prayed for. - To this petition McCormack filed his demurrer and answer. On the 3d day of November, 1875, an order was entered dissolving the restraining order granted August 19, 1875, and allowing : McCormack his costs against James. From this order an appeal was taken to the circuit court. . On the 28th day of March, 1876, the appeal was docketed in the circuit court at Lynchburg, and an order issuedrestraining -McCormack from all further proceedings in the district court, until the adjudication of the appeal in the circuit court. Onthe ' - day of March, 1877, the appeal was heard at Lynchburg, by Judge BOND, the circuit judge, and the decrees of June 12 and November 3, 1875, were affirmed, and the appeal dismissed. From this decree an , appeal was'taken by David E. James to the supreme court of the United States. In the supreme court the cause was dismissed under the six teenth rule of that court. Nothing more was done in the case until June · 5, 1883, when a decreewasellteredin accordance with the decree ot 1874, and the prayer of the amended and supplemental bill filed by McCor111ack, October 1, 1875, referring to M. Honaker, a special commIssioner, to take anllccount, and report "what liability, if any, attaches to the alleged deed of trust exhibited by the defendant David · E: James, with his answer, purporting to convey to James Ward, for the purposes therein mentio11ed, the land therein mentioned, by said Hansford James, which paper bears daLe April 25, 1861. What would be a reasonable rent for said land from the 24th of June, 1870, to the ·'5th day of July, 1875?" The question of rents and profits was, byagreement inwtiting,signed by the plaintiff and defendapt, submitted to the -arbitration of James T. Porter and R. C. Williams, as was also the question as to the value of permanent improvements put upon the lands by the defendant, David E. James, during his occupation under his purchase from Holbrook, assignee in bankruptcy of Hansford .James. Said 'arbitrators made their award, which was adopted by the special commissioner,and made part of his report. " f The commissioner reports that the debt secured by thE;ldeed of trust ,. is a liability: attaching to the plaintiff by reason ,of his purchase of the land conveyed in the trust deed. The substance of the report is that the debt of $2,225 is alien on the land, and this is the main point of troversy iIi. this cause. - ' -
M'CORMACK V. JAMES.
17
To this report the plaintiff, McCormack, files exceptions, marked 1, 2,3,4, and 5. The defendant files exceptions numbered 1 and 2. The second exception by the defendant, which is to the amount of rent allowed McCormack-by the commissioner, is withdrawn in the written the defendant's counsel. The remaining exception is agreement filed for the failure of the commissioner to report certain judgments claimed by the defendant to be liens on the land conveyed in trust. These judgments were excluded, as the commissioner states, for want of sufficient proof. The court is of opinion that the report is correct in this respect, and the exception musll be overruled. The first exception filed by the plaintiff is for failure of the commissioner to report what facts were, according to his view of the evidence, proved. The report is in conformity with the requirements of equity rule No. 76, and this exception must be overruled. For the same reason plaintiff's exception No.3 must be overruled. Plaintiff's fourth exception is that the commissioner erred in allowing the defendant, David E. James, charges for permanent improvements put .upon the property while held by him under his purchase from G. J. Holbrook,assignee of Hansford James, bankmpt. While it is tme, as alleged in the exception, that this matter was not embraced in the deGree of reference, yet the question is raised in the pleadings. The parties. plaintiff and defendant,examined witnesses as to the value of the improvements, and the plaintiff and defendant agreed to submit the same to :ai'hitration. They had the power to do this. It was a matter in controversy, and the amount ascertained by the award was properly allowed by the commissioner, and this exception must be overruled. Plaintiff's fifth exception says: "The evidence shows that the trust debt was paid by Hansford James, and the commissioner should therefore have reported that there was no existing liability by reason of the deed· of trust." The evidence, in the opinion of the court, does not show the debt to have been paid j and, granting that the testimony on this question was conflicting, it was the province of the commissioner to determine its weight and credibility. The exception will be overruled. 'fhis disposes of all the exceptions filed by the plaintiff and the defenJant, except the second exception filed by the plaintiff. This exception states two grounds which, it is asserted, should defeat the claim of the defendant, David E. James, under the deed of trust of April 25, 1861. The first is ,"that McCormack is an innocent purchaser for valuable consideration without notice of the deed of trust." The second is "that the defEmdant, David E. James, participated in the negotiations which culminated in the sale to and the payment by McCormack of almost the entire purchase money, and that David E. James is estopped, by his con. duct, to assert bis lien by deed of trust." As to the first ground of exception, there is no principle of law that would seem to be more firmly established by an unbroken line of decisions than that a subsequent purchaser for valuable consider&tion without notice, in order to be protected. must be a complete purchaser; that is, a purobaser of the legal title, who, before notice of an unrecorded incumv.36F.no.1-2
18
, brance, has both paid tne whole of the purchase money and taken a con· veyance. This, it must beremembered, is necessary as to an unrecorded conveyance. The following are a few of the many decisions sustaining this doctrine: Briscoe v. Ashby, 24 Grat. 476, 477; Shirras v. Caig, 7 Cranch,34-48; Vattierv. Hinde, 7 Pet. 274; Boonev. qhiles, 10 Pet. 211; Society v. Stone, 3 Leigh, 218-236; DOlfWCllv. Buchanan's Ex'rs, Id. 381-384. See, also, 2 Rob. Pro (Old Ed.) 29,30,307; 2 Minor, Inst. 1028-1031; Bank v. Manoni, 76 Va. 802. The only modification of this doctrine to be f{)t1l1d in the decisions of the supreme court of appeals of Virginia is in Preston's Adm'r V. Nash, 75 Va. 949. In that case the court held that a subsequent purchaser without notice of an unrecorded deed of trust was one who had paid the whole of the purchase money, and was entitled to a conveyance. In the case before the court the deed of trust securing James was recorded before the purchase by McCormack, and the purchaser had not paid the whole of the purchase money, so as to entitle him to a conveyance. The facts in the case of Preston's Adm'r v. Nash are so widely different from those in the case under consideration as not to require discussion. In fact, all of the decisions on this subject of an innocent purchaser for valuable consideration without notice deal with the question of priority arising out of unrecorded deeds, creating liens on the purchased property. None of them involve the decision of the validity of a deed properly executed and recorded, as in this case,prior to the purchase. In some of the United States, recordation of deeds or other writings 'required to be registered in accordance with the registry acts is, held to charge a subsequent purchaser with notice. It is difficult to see how a different view can be held'tIS to Ii deed of trust properly recorded under the 'registry acts of Virginia. Chapter 118, § 5; Code Va. 1860, provides that every deed of trust or mortgage, conveying real estate or goods and chattels, shall be void as to,creditors and subsequent purchasers for valuable consideration without notice, until and except from the time it is duly admitted to record in the county or corporation wherein the propThe very object of the' erty embraced in such contract or deed may in enacting this provision was to give the purchaser or other person'dealing with the property notice of any incumbrance thereon. to investigate the condition of For the conveniEmce of persons .the property, the clerk is required to keep an index of the record-book, -as well in the name of the grantor as of the grantee. In order to give further notoriety to such transactions, the clerk is required to' post, in the morning of the first day of each tel;m of his 'court, at the front door of the court-house, a list of aIr writings admitted to record under chapter 121, Code 1860, during or since the preceding term, and a duplicate of such list is to be the court, Rnd entered of record in the minutes. Code Va. 1860, c. 121, §§ 8, 10. So complete are, the requirements for the registratibn ofall matters touching the titles to land, so easy of access is the necessaryinforrnation, andao general among all classes of people is the knowledge where and how it can be attained, that, in the language of a distinguished law writerl"for one to be dErceiv:ed ar-
M'CORMACK V.
19
gues in general a negligence so gross as to exclude sympathy for the sufferer." 2 Minor, Inst. 988. But, if we should concede that the deed of trust to Ward was not constructive notice to McCormack, the purchaser, I think the weight of the testimony shows that he knew of the existence of this lien at the time of his purchase. In no view of the case can the court regard him as an innocent purchaser without notice, and thus declare invalid the deed of trust, executed, acknowledged, and recorded in conformity with all the requirements of law necessary to insure the payment of the debt which the trust was given to secure. To do so would be to set a precedent in this court that would sanction the grossest negligence in a purchaser of lands, set at naught the solemn records of our registry acts, by testimony resting on the uncertain .memory of witnesses given 25 years after the record has been made, and to render uncertain and insecure the highest assurances that debtors can give for the security of their creditors. As to the s.econd branch of the second exception, that "David E. James was cognizant of and participated in the negotiations which culminatedin the sale, and is therefore estopped by his conduct from assertinghis lien by deed of trust," the charges thus made rest upon the uDsupported testimony of McCormack, plaintiff. The answer of David E. James, which is responsive to the allegations in the amended and supplemental bill, denies that he participated in the negotiations for the sale, and asserts that McCormack had notice of the lien. The answer of Hansford James, in response to allegatioDs in the amended bill, says McCormack had notice of the lien of David E. James. The testimony of the other witnesses is too indefinite in time and circumstances, or the time fixed as to conversations with McCormack on the subject of the lien is too remote from the date of sale, to be entitled to much weight. Fraud, actual or constructive, is the essential and central element (2 Porn. Eq. JUl'. § 821) in an equitable estoppel. "Now, the principle of estoppel invoked by the appellants to preclude the appellees from setting up in this case a title in themselves as heirs of Clark, discharged of the trust, rests ripon the ground of fraud." Judge JOYNES in Bargamin v. Clarke, 20 Grat. 552. Kerr, Fraud & M.130; 1 Story, Eq. JUl'. § 391. "He who alleges fraud must clearly and distinctly prove the fraud he alleges." Kerr, Fraud & M. 382, 3R3. If the case here stood alone upon. the testimony of the plaintiff, McCormack, and the answer of the defendant, 'James, the answer must prevail, and the charge of fraud is unsustained. Id. 398. The language employed by the defendant, David E. James, during the negotiations between McCormack and Hansford James, were we to admit that he used it, could not, we think, amount to an estappel, had the equity been a latent, instead of a recorded, lien; for at tbat time David E. James had no interest whatever in the deed of trust, he having assigned his interest therein to Henry Horne ,rp.ore than 12 months before. The language attributed to him by McCormack, which is: "He asked lue what Was the reason I did 110t buy Hnnsford's land. Said that I must buy it; it would eniiblehim to:buy the Mitchell Scott land, and pay every dollar he owed in
20
an anxiety on his part to see his relative and partner in business, Hansford James, get out of debt; and this seems to have been one of the objects of Hansford James in selling, for we find him, after getting part of the purchase money from McCormack, trying to payoff the deed of trust debt to Henry Horne, who then held it, but who refused to receive Confederate money. David E. James' had no interest in the debt at that time, nor did he have any gntil four years thereafter, when he repurchased it. He could have had no motive in concealing the existence of the deed of trust, or for fraudulently influencing McCormack to purchase the land. It is to be noted that the cases of estoppel referred to by the counsel for the plaintiff, and cited by the text writers, are instances of latent, concealed, or unrecorded incumbrances. See 1 Story, Eq. Jur. §§ 398,399. No case has been cited in argument, and the court has found none in the investigation of this question, where the beneficiary in a recorded deed of trust or mortgage has been estopped from asserting his lien on the ground of concealment, frand, or misrepresentation to a purchaser of the land. It seems that a registered lien has been regarded by the courts and text writers as constructive notice to the purchaser of the land. What has been said heretofore with regard to a registered deed of trust being constructive notice to a purchaser for value is equally applicable to this branch of the plaintifi"s exception No.2, and need not be repeated. There were a few other points called to the attention of the court in the argument, but as they are not raised in the pleadings, it is not necessary that they be noticed or acted upon by the court. There was, however, one question presented to the court, while not raised in the pleadings, which is apparent upon the record, and the court will dispose of it. It is as to the validity of the certificate of the justice taking the acknowledgment of Hansford James to the deed of trust to Ward, dated April 25, 1861. The certificate is as follows: "Virginia, to-wit: Smyth County, to-wit: This is to certify that Hansford James, whol'e name appears signed to the withIn deed, came this day before me, Robert C. Williams, acting justice for said county, and acknowledged the same to be his act and deed. and desired me to certify the same to the clerk of the county court of said county, that it may be duly recorded. Witness my hand and seal this :::15th day of April, 1861. "R. C. WILLIAMS, J. P." The provision of the statute of Virginia, as to the certificate of acknowledgment to be taken by ,a justice, is as follows: "Such cOllrt or clerk shall alsp admit e\'ery sucb writing to record, as to any person whose name is signed thereto, upon a certificate of his acknowledgment before a justice or notary public within the UnIted States, written on 01' annexed to the same to the following effect, to-wit: County of - - , to-wit: I, - - , a justictl of tbe peace for the county aforesaid, in the state of - - , do certify that - - - , whose name is signed to the writing above (or bereto annexed) bearing date on the - - - day of - - - , has acknowledged the same before me in my county aforesaid. "Given under my hand this - - day of - - . " See Code 1860, c. 121, § 3.
· BUFORD "'. COOK.
21
It is not necessary that the language of the certificate be identical with that of the form given by the statute. It is only necessary that it conforms to it in effect. The certificate under consideration conforms to the form in the statltte in all the necessary elements, and this is all that is required. "It is a substantial compliance in everything material." See Tod v. Baylor; 4 Leigh, 513; Siter v. McOlanachan, 2 Grat. 294. None of the exceptions to t4e commissioner's report being sustained, the report will be confirmed. NOTE. In conformity with this opinion, a decree was rendered May 27,1886, in favor of David E...Tames for $4,981.70, the amount ascertained to be due him by Co=issioner Honaker's report, with interest on $2,225, part thereof, from October 26, 1885; and awarding costs to defendant; and further directing a sale of the lands in the bill and proceedings mentioned, unless McCormack shouldl within 60 days thereafter, satisfy the decree. From this decree McCormackappealea to the circuit court, BOND,.T. This 8l>l?eal being heard, the decree. of the district court was affirmed,. an.d a decree accordingly was tendered .Tuly 15,1887; from which last decree there has been no appeal.
BUFORD "'. COOK
et al. August 31, 1888.)
(Oircuit Court,
w.n. Iowa.
1:
,
FRAUDULENT CONVEYANCES-WHAT CONSTITUTE-EvIDENCE-SUFFICIENCY.
In· a proceeding by creditors' bill to reach certain land which had been conveyed to the debtor's mother-in-law, the latter claimed that she was to be allowed a certain sum per year for services in the. debtor's family, and that she owned and had paid for the land in suit, but knew nothing about how or when the pnrchase had been made, Or a building thereon had been erected. The proceeds of the only property she had, had been invested in other lands, and her husband, during the last years of his life, having been disabled, had contributed nothing to their support. The debtor had in fact furnished and paid the money. Held, that complainant was entitled to a decree subjecting such property to the satisfaction of his judg-mcnts. 1
SAME.
In a proceeding by creditors' bill to set aside certain mortgages liS frauduIlmt, it appeared that the mortgagee, who was the debtor's banker, had begun business with a capital of $10,000, and in six years· had taken mortgages for advances to the debtor to the amount of $23,000. The debtor had previ· ously been in embarrassed circumstances, and was carrying on a larg-e agricultural implement business, with warehouses and agents in different places, in an extravagant and careless manner. As to a portion of the indebtedness, its genuineness. was testified to by the and debtor; and the former offered to produce the account, but it was not called for As to the remainder, a full itemized account was presented. and no item was shown to be wrong. Held tbat, although some of the _debtor's property might not have been accounted for by the mortgagee, and certain chattel mortgages taken as additional security might not be sustainable, the transactions could not be , .said to be fraudulent. 1
In Equity. .. Creditors' bill by James M. Buford, assignee, against John B. Cook, ViolaE. Cook, Susan Smith, and W.'L. Culbertson, toaet aside fraudulent conveyances. . as to what is su1llcient evidence of fraudulent intent to cause a conveyance by a 'debtor to be set aside,Neal v. Foster, p08t, 29, and note.
