March 13, 1930. The opinion of the Court was delivered by Action by the National Bank of Newberry to foreclose a mortgage upon real estate given to it by the defendant Mills M. Livingston on March 18, 1926, to secure a note for $5,806.54, dated on that day and due October 15, 1926, with interest after maturity at 8 per cent. per annum and 10 per cent. attorney's fees. The mortgage was duly recorded on the day of its delivery, March 18, 1926. The mortgaged premises were a tract of land containing 428.11 acres, made *Page 278 up of three separate tracts: One of 163.9 acres; another of 156.43 acres; and a third, known as the Cooley place, of 117.8 acres. The present controversy has arisen in reference to the last-named tract, the Cooley place.
The defendants are:
1. John N. Livingston — an accommodation indorser of the note of the bank.
2. R.E. Livingston — also an accommodation indorser.
3. J.P. Icard — the grantee under a deed of Mills M. Livingston, dated March 6, 1925, of the standing timber upon the 117.8 acre tract, the Cooley place, in consideration of $5,000.00 cash. This timber deed, though dated March 6, 1925, was not recorded until September 18, 1926.
4. The First Carolinas Joint-Stock Land Bank of Columbia — the holder of a mortgage given to it by Mills M. Livingston, dated March 15, 1926, upon the three tracts referred to, to secure a note for $7,000.00, dated on that day, and payable in certain installments, with interest and attorney's fees. This mortgage was duly recorded on March 18, 1926.
5. The Read Phosphate Company — presumably a judgment creditor, as to which there appears no reference in the transcript or elsewhere.
The timber deed from Livingston to Icard, dated March 6, 1925, was not recorded, as stated, until September 18, 1926, after the mortgage to the land bank, dated March 15, 1926, and the mortgage to the Newberry bank, dated March 18, 1926, had been given and duly recorded; the relative priorities would, upon the face of the transaction be: (1) The land bank mortgage upon all three tracts: (2) the Newberry bank mortgage upon all three tracts; and (3) the J.P. Icard deed to the timber upon the Cooley place.
Icard, however, contends that both the land bank and the Newberry bank, at the times of the execution and delivery to them respectively of the mortgages set up by them, had knowledge of the execution and delivery by Livingston to *Page 279 him of the timber deed, or notice of such facts as would, if pursued with due diligence, have imparted that knowledge to them. He therefore claims that his deed has priority over the mortgages, so far as the timber on the Cooley place is concerned. Both banks deny Icard's contention.
The case was referred to H.K. Boyd, Esq., clerk of Court, and on December 27, 1928, he filed a report, holding that neither the land bank nor the Newberry bank had any notice of the Icard timber deed, and that their mortgages were entitled to priority over it, the land bank first, and the Newberry bank next.
Upon exceptions to this report by Icard, the matter came on to be heard by his Honor, Judge Featherstone, who, on January 9, 1929, filed a decree sustaining the conclusion of the clerk as to the Newberry bank, but reversing it as to the land bank, holding that Icard was entitled to priority over the land bank mortgage, as to the timber on the Cooley place, by reason of the knowledge of the land bank of the prior execution of the timber deed. From this decree both Icard and the land bank have appealed; Icard being appellant as to the Newberry bank mortgage, and respondent as to the land bank mortgage; the land bank being appellant as to the priority over it of the Icard timber deed; and the Newberry bank being respondent as to the priority of its mortgage over the Icard deed; no question being made of the priority of the land bank mortgage over the Newberry bank mortgage.
It appears that after the execution by Livingston of the timber deed to Icard on March 6, 1925, to wit on May 6, 1925, Livingston had given a mortgage upon the Cooley place to Mrs. Wheeler, to secure a note for $1,000.00 dated on that day and due May 6, 1926, with interest from date, and attorney's fees. The mortgage contained the following recital after a description of the Cooley place: "Same being the identical tract of land * * * on which I recently *Page 280 sold to J.P. Icard the standing timber and this mortgage isjunior to said timber deed."
It was recorded on the day of its execution and was satisfied on March 19, 1926, two months before the maturity of the note. The dates of the land bank mortgage, March 15, 1926, of the Newberry bank mortgage, March 18, 1926, and of the satisfaction of the Wheeler mortgage, March 19, 1926, being so nearly contemporaneous, it is fair to assume that the Wheeler mortgage was satisfied out of the funds loaned by the two banks, and naturally both banks knew of its existence. At any rate it was recorded, and, being an incumbrance upon the property proposed to be mortgaged to the banks, it was a matter that affected the equitable interest which they proposed to acquire, and, while not strictly a link in the chain of title to the real estate, it was a necessary subject of inquiry in connection with the proposed loans.
In the mortgage of Livingston to the Newberry bank upon the three tracts aggregating 428.11 acres (which included the Cooley place), occurs this statement: "The above mentioned and described land is the identical tract of land described in a mortgage executed by the said Mills M. Livingston to The First Carolinas Joint Stock Land Bank of Columbia, S.C. for Seven Thousand Dollars, bearing date the fifteenth day of March, 1926, and recorded in the office of the Clerk of Court for Newberry County, S.C. in Mortgage Book `38,' at page. . . . , and this mortgage is given and accepted by the parties hereto as and for a second and junior lien on said tract of land."
We do not think that anything could be added to the reasoning and conclusion of his Honor, the Circuit Judge, that the land bank is chargeable with notice of the Icard timber deed; his decree in this respect is affirmed.
II. In regard to the conclusion that the mortgage of the Newberry bank has priority over to the Icard timber deed, the matter is not at all free from doubt. The first anomaly that presents itself is that the decree awards the Newberry *Page 281 bank the first lien upon the timber on the Cooley place; the Icard deed the second claim, and the land bank the third.
The Newberry bank cannot enforce this priority over the land bank to the timber on the Cooley place, for it has expressly agreed in its mortgage that the land bank should have priority over it to the entire Cooley place, which of course includes the timber; and, the decree holding that the Icard timber deed has priority over the land bank mortgage to the timber, it would seem to follow that Icard has the first claim to the timber.
III. Passing this complication, however, the main issue in reference to the adjudicated priority of the Newberry bank mortgage over the Icard timber deed is whether the recital in the Wheeler mortgage of the existence of that deed was sufficient notice to the Newberry Bank of the existence of the Icard timber deed or of such facts as were sufficient to put the bank upon an inquiry which would have fully developed that fact.
There can be but little doubt after the decision of Moylev. Campbell, 126 S.C. 180, 119 S.E., 186, 190, that the law imputes to a purchaser who proposes to acquire title to real estate, or to one who proposes to acquire a mortgage lien upon it, notice of the recitals contained in any properly record instrument of writing which forms a link in thechain of title to the property proposed to be acquired or mortgaged; and that this principle is not at all abrogated by the provisions of Section 5313, Vol. 3, Code.
It is there held: "The law imputes to a purchaser of real estate notice of the recitals contained in the written instruments, forming his chain of title (20 R.C.L., 353, § 15;Cordova v. Hood, 17 Wall, 1, 21 L.Ed., 587; see Aultmanv. Utsey, 34 S.C. 571, 572, 13 S.E., 848), and charges him with the duty of making such reasonable inquiry and investigation as is suggested by the recitals and references therein contained. Generally the means of knowledge and the duty of using them are equivalent to knowledge." *Page 282
The vital question is whether an unsatisfied, recorded mortgage, which contains a recital of a fact affecting the title under examination, can be considered a link in the chainof title, a muniment of the title, or, if not, whether the principle announced should be extended to include such a mortgage, not strictly such link or muniment, but a subject of imperative inquiry in tracing the title under investigation. In either event the person interested in the examination of the title is charged with notice of the recital and of the ultimate fact which a prosecution of such notice would develop.
There is and can be no question but that the Wheeler mortgage, having been duly recorded, was constructive notice of its existence to the Newberry Bank, if it did not as a fact have actual knowledge of it, which under the circumstances can hardly be denied; the inquiry is whether that notice, actual or constructive, extends, to the recital in the mortgage, the fact of the existence of the Icard timber deed.
It is to be borne in mind that at the dates of the land bank and Newberry bank mortgages, the Wheeler mortgagewas open on the books unsatisfied; a fact which not only made its record constructive notice to the Newberry bank of its contents, including recitals, but imposed upon it the duty of an inspection of that record as bearing upon the title to be deduced. It has been held, we think correctly, although it is not necessary now to so decide, that a proposed mortgagee is not bound to go back over the records of satisfied mortgages to look for recitals therein. 23 R.C.L., 219. We think that the execution of the two bank mortgages and the satisfaction of the Wheeler mortgage were for all practical purposes to be considered as synchronous. The bank mortgages were not intended to become effective until the Wheeler mortgage was satisfied, and that could not be done until the loans had been perfected with the proceeds of which the Wheeler mortgage was to be satisfied, demonstrating that the parties were fully informed of the existence of the Wheeler mortgage. *Page 283
Common prudence requires a prospective purchaser or mortgagee to examine the title to property, which necessarily includes, not only the regularity of the title, but its freedom from prior incumbrances. The duty is as imperative in the one case as in the other. It follows that every prior conveyance or mortgage, duly recorded, unsatisfied of record, constitutes constructive notice to him, not only of the actual conveyance or incumbrance, but of the recitals which affectthe title.
In Simmons Creek Coal Co. v. Doran, 142 U.S. 417,12 S.Ct., 239, 246, 35 L.Ed., 1063, the Court held: "Caveatemptor is one of the best settled maxims of the law, and applies exclusively to a purchaser. He must take care, and make due inquiries, or he may not be a bona fide purchaser. He is bound not only by actual, but also by constructive notice, which is the same in its effect as actual notice. He must look to the title papers under which he buys, and is charged with notice of all the facts appearing upon their face, or to the knowledge of which anything there appearing will conduct him. He has no right to shut his eyes or his ears to the inlet of information, and then say he is a bona fide purchaser without notice."
In Northwestern Bank v. Freeman, 171 U.S. 620,19 S.Ct., 36, 39, 43 L.Ed., 307, the Court held: "If the bank was charged with notice of that mortgage, it was charged with notice of its contents. `Notice of a deed is notice of its whole contents, so far as they affect the transaction in which notice of the deed is acquired.' 2 Schvales L., 315, cited and approved in Boggs v. Varner, 6 Watts S., 469, 473. A purchaser is charged with notice of every fact shown by the records, and is presumed to know every other fact which an examination suggested by the records would have disclosed."
In 20 R.C.L., 353, it is said: "Where a person is charged with notice, or actually knows, of an instrument, he is also charged with notice of all facts appearing on the face of the *Page 284 instrument or to the knowledge of which anything thereappearing would conduct him."
And in 23 R.C.L., 216: "The rule supported by the best authority is that the record is constructive notice to creditors and subsequent purchasers of such facts as they would have learned from the record, if examined. A purchaser or mortgagee is chargeable with notice of the conditions and recitals contained in all the recorded instruments forming his chainof title, and the extent of the title conveyed or otherwiseaffected, but not that a grantee or mortgagee has any greater interest than that appearing in the recorded instrument. This principle not only applies to recitals in deeds and mortgages, but includes those in wills and other records without which the title could not be deduced."
In 41 C.J., 562, it is said: "A person affected by the constructive notice which the record of a mortgage or declaration of trust affords, is chargeable with knowledge of allsuch facts as are specifically set forth or recited in the instrumentsrecorded, including the legal consequences and effect of its various provisions, and also according to some of the authorities, of all such facts as would have been disclosed by a proper investigation, starting from the mortgage as a point of departure — provided it is a mortgage by one in the chainof title."
In 1 Jones on Mortgages (7th Ed.), § 524, it is said: "Amortgage duly recorded is notice not only of the existence ofthe mortgage, but of all its contents, so far as those fallwithin the line of the chain of title. * * * It is notice of a prior unrecorded mortgage referred to in the covenant against incumbrances. It is notice not only to purchasers but to the subsequent creditors as well. * * * The record imparts notice of all the facts which could have been ascertained by an actual examination thereof, including not only those recited in the record, but also material matters suggested thereby, which might be disclosed by reasonable inquiry." *Page 285
In note to Lodge v. Simonton, 23 Am. Dec., 48, it is said: "Not only are the recitals in the conveyance under which a vendee holds immediately binding upon him, but he is alsobound to give heed to the recitals in prior instruments whichare necessary to complete his chain of title, and will beaffected with notice of those facts to which such recitalsrefer. This principle applies not only to recitals in deeds and mortgages, but includes those in wills and records, without which the title could not be deduced. This general doctrine is thus stated by Leonard, C., in Cambridge Valley Bank v.Delano, 48 N.Y., 326: `The principle of equity is well established that a purchaser of land is chargeable with notice, by implication, of every fact affecting the title which would be discovered by an examination of the deeds or other muniments of title of his vendor, and of every fact as to which the purchaser, with reasonable diligence or prudence, ought to become acquainted. If there is sufficient contained in any deed or record which a prudent purchaser ought to examine to induce an inquiry in the mind of an intelligent person, he is chargeable with knowledge or notice of the facts so contained.'"
In Cordova v. Hood, 17 Wall., 1, 8, 21 L.Ed., 587, it is said: "Wherever inquiry is a duty, the party bound to make it is affected with knowledge of all which he would have discovered had he performed the duty. Means of knowledge with the duty of using them are, in equity, equivalent to knowledge itself."
In Bank v. Lee, 99 Ala., 493, 12 So., 572, 573, 19 L.R.A., 705, it is said: "Notice, sufficient to put one on inquiry, is notice of all that such inquiry will naturally lead to."
In Mettart v. Allen, 139 Ind. 644, 39 N.E., 239, it is held, quoting syllabus: "A purchaser of land is bound by the facts which an ordinarily diligent examination of the records, and of the recitals of the instruments recorded affectingthe land conveyed, would disclose." *Page 286
In Matt v. Matt, 156 Iowa, 503, 137 N.W., 489, it is held, quoting syllabus: "Parties cannot complain of want of notice of the form of a mortgage in which they are interested if the mortgage was on record."
In Kirsch v. Tozier, 143 N.Y., 390, 38 N.E., 375, 376, 42 Am. St. Rep., 729, the Court said: "The savings bank, when it took its mortgage, had constructive notice of every fact which could have been ascertained by an inspection ofthe deeds or mortgages on record in the chain of title."
In note to 42 Am. St. Rep., 733, Judge Freeman says: "Purchasers of land must be deemed to have examined everydeed and instrument on record affecting their title, and to have notice of every fact disclosed by the record and every other fact which an inquiry suggested by these records would have led up to" — citing McPherson v. Rollins,107 N Y, 316, 14 N.E., 411, 1 Am. St. Rep., 826; Backer v.Pyne, 130 Ind. 288, 30 N.E., 21, 30 Am. St., Rep., 231;Stewart v. Matheny, 66 Miss., 21, 5 So., 387, 14 Am. St. Rep., 539; Parker v. Conner, 93 N.Y., 118, 45 Am. Rep., 184.
In McPherson v. Rollins, 107 N.Y., 316, 14 N.E., 411,412, 1 Am. St. Rep., 826, the Court said: "As intending purchasers they must be presumed to investigate the title, and to examine every deed or instrument forming a part of it, especially if recorded. They must therefore be deemed to have known every fact so disclosed (Acer v. Westcott,46 N Y, 384, 7 Am. Rep., 355), and every other fact which an inquiry suggested by those records would have led up to. Thus, they are plainly chargeable with notice of the mortgage, and of all the facts of which the mortgage could inform them."
In a note to Pyles v. Brown, 189 Pa., 164, 42 A., 11, 69 Am. St. Rep., 794, it is said: "A vendee is chargeable with notice of the recitals contained in the instruments forming his chain of title. Not only is he bound by recitals in the conveyance under which he immediately holds, but he must give *Page 287 heed to the recitals in prior instruments which are necessaryto complete his chain of title, and will be affected with noticeof those facts to which such recitals refer. This principle applies not only to recitals in deeds and mortgages, but includes those in wills and records, without which the title could not be deduced."
In Whistler v. Cole, 81 Misc. Rep., 519,143 N.Y.S., 478, the Court held: "A purchaser of land is chargeable with notice by implication of every fact affecting the title and discoverable by an examination of the deeds or other muniments of title of his vendor, and of every fact as to which the purchaser, with reasonable prudence * * * ought to become acquainted."
In Bank v. Parsons, 54 Minn., 56, 55 N.W., 825, 40 Am. St. Rep., 299, it is held: "Whatever is sufficient to put a person of ordinary prudence upon inquiry is constructive notice of everything to which that inquiry would presumably have led."
In Anderson v. Reid, 14 App. D.C., 54, it was held that a person purchasing land is bound to examine the records, and whether he does so or not he will be charged with notice of every fact the knowledge of which might there have been obtained.
See, also, Keesling v. Doyle, 8 Ind. App. 43,35 N.E. 126; Healey v. Worth, 35 Mich. 166; Miller v. Holland,84 Va. 652, 5 S.E. 701; Fulkerson v. Taylor, 102 Va., 314,46 S.E., 309.
In Smith v. Lockwood, 100 Minn., 221, 110 N.W., 980, it was held that a purchaser of land has constructive notice of all facts affecting the title of which he would have learned by an examination of the records.
In Ochoa v. Hernandez y Morales, 230 U.S. 139,33 S. Ct., 1033, 57 L.Ed., 1427, it was held that the protection of bona fide purchasers and mortgagees under the Mortgage Law Porto Rico, arts. 33, 34, 36, 37, against infirmities in their grantor's title not plainly expressed on the registry, extends *Page 288 to matters of fact and not of law, and, where the registry gives notice of facts rendering the title invalid, the purchaser relying on the record takes his title subject thereto.
In Mathieson v. Craven (D.C.), 228 F., 345, it was held that purchasers are chargeable with notice of those facts of record, or suggested by record, of which they or their attorneys could not have remained in ignorance, save through failure to observe any proper diligence and care.
In White v. Moffett, 108 Ark. 490, 158 S.W. 505, it was held that a purchaser of real property must take notice of all prior recorded instruments in the line of his purchased title.
In Loser v. Plainfield Savings Bank, 149 Iowa, 672,128 N.W., 1101, 31 L.R.A. (N.S.), 1112, it was held that an instrument properly recorded is notice to the world, not only of facts therein expressly set forth, but also of all other material facts which an inquiry thereby reasonably suggested would have developed, so that notice is not avoided by variations in names which ought not to mislead a purchaser of ordinary prudence and intelligence.
In Hewling v. Blake, 110 Miss., 225, 70 So., 247, it was held that in action to confirm title, facts of record held to charge plaintiffs, claiming as bona fide purchasers, with notice of defendants' claim under adverse possession.
In Garrett v. Wiltse, 252 Mo., 699, 161 S.W. 694, it was held that, under Rev. St., 1909, § 2810, relating to notice by record, a purchaser is charged with constructive notice of everything, in prior recorded deeds, which go to make up the chain of title under which he holds.
In Maurer v. Friedman, 197 N.Y., 248, 90 N.E., 814, it was held that a purchaser of land is presumed to investigate his title, and, where any defect or restriction or covenant appears in the recorded chain of title, it is sufficient to charge him with notice.
In Allison v. White, 285 Ill., 311, 120 N.E., 809, it was held that a purchaser is chargeable with notice of what appears *Page 289 on record concerning his chain of title, and, where facts appear which would put a reasonably prudent man on inquiry, he is chargeable with that knowledge which would have been discovered by diligent inquiry.
In Griggs v. Houston Oil Co. of Texas (Tex.Com.App.), 213 S.W. 261, it was held that land purchasers are charged with knowledge of all facts appearing in recorded instruments, and, where circumstances appear in chain of title sufficient to put a reasonably prudent man on inquiry, the purchaser is charged with knowledge of facts which might have been discovered by reasonable inquiry.
In Simmons v. Simmons, 85 W. Va., 25, 100 S.E.; 743, it was held that, generally, whatever is sufficient on the face of the record of title to land to direct a purchaser's attention to prior rights and equities of third persons will put him upon inquiry and will amount to notice to him, as he is bound to take notice of everything disclosed by the record.
In Bank v. Rogers, 87 Fla., 147, 99 So., 546, it was held that purchasers of land are chargeable with notice of liens, conveyances, contracts, or judicial proceedings affecting the title or ownership thereto disclosed by official records.
In Glover v. Brown, 32 Idaho, 426, 184 P., 649, it was held that one claiming title to lands is chargeable with notice of every matter affecting the estate which appears on the face of any recorded deed forming an essential link in his chain of title, and also with notice of such matters as he might have learned by inquiry which the recitals in such instruments made it his duty to pursue.
In Simmons v. Parker, 61 Ind. App. 403, 112 N.E. 31, it was held that, where there is a mortgage of land on record, the buyer is charged with constructive notice of the fact, of the parties executing it, and of its recitals.
In Simms v. Thompson, 291 Mo., 493, 236 S.W. 876, it was held that the purchaser of land is charged with constructive notice of everything contained or recited in the recorded *Page 290 deeds which lie in and constitute the chain of title under which he holds.
In Whayne v. Seamans, 95 Okla. 168, 217 P., 859 andBynum v. Moore, 101 Okla. 128, 223 P., 687, it was held that a purchaser of lands who buys in reliance upon the record title is chargeable with all the notice brought to him by the records, and, if the record contains matters that would put a person of ordinary prudence upon inquiry into the nature of the title of the grantor or of the rights and equities of a former owner, then the law charges such purchaser with all the knowledge an inquiry upon his part, prosecuted with reasonable diligence, would have brought him.
In Houston Oil Co. of Texas v. Lane (Tex.Civ.App.)200 S.W. 216, it was held that every purchaser of land is chargeable with all that real estate records show in claim of title under which he claims, including all recitations therein.
The situation was simply this: The Newberry bank, proposing to take a mortgage upon the Cooley place and other tracts, was in duty bound to examine the record for liens upon or defects in the title of Livingston to the Cooley place which would affect the equitable lien which it proposed to take; it was not only bound by constructive notice through the record of the Wheeler mortgage of that mortgage and of the recitals therein contained, but it had actual notice of that mortgage, and was bound by all that appeared in it.
The Newberry bank authorized Mr. Workman to draw up the mortgage which it proposed to take from Livingston; in that matter he acted as agent of the bank though without compensation from it, looking to Livingston therefor; he was informed of the Wheeler mortgage containing the recital referring to the Icard timber deed, and his knowledge is imputable to the Newberry bank. Mr. Workman testified: "My firm represented Mr. M.M. Livingston in the negotiation of a loan for him from the First Carolinas Joint Stock Bank. I prepared the abstract for said bank. At the time the *Page 291 loan was consummated, The National Bank of Newberry having decided and agreed to take the second mortgage, and knowing that I had prepared the abstract for the Land Bank, requested Mr. Livingston to have a second mortgage prepared, and suggested that inasmuch as I was handling the matter that I prepare the mortgage."
We think therefore that the decree of his Honor, the Circuit Judge, is erroneous in holding that the Newberry bank is not chargeable with knowledge of the Icard timber deed.
The judgment of this Court is that the decree of the Circuit Court be modified as herein indicated, and that the case be remanded to that Court for such further orders as may be consistent with the conclusions announced.
MR. ACTING ASSOCIATE JUSTICE SMITH concurs.
MR. CHIEF JUSTICE WATTS concurs in result.
MESSRS. JUSTICES BLEASE and CARTER did not participate.