McNeil v. Jordan

The opinion of the court was delivered by

Horton, C. J.:

1. Bona fide purchaser; fraud of grantor. The principal questions involved in this •controversy are: Was the deed obtained by Charles H. Payson from Lena McNeil absolutely void? Second, if not void, but voidable only, was the actual possession of the premises by Lena McNeil notice to the defendants of the fraudulent title of their grantor? If the deed to Jordan was absolutely void, then it was and is an absolute nullity, and nothing can be founded upon it. It cannot be made the basis of any title. On the other hand, if voidable only, it passed an estate of which Payson became legally seized, defeasible in his hands, but not in the hands of innocent, bona fide purchasers under him. On the part of the plaintiff, it is contended that the deed was and is absolutely void, because in fact it was a deed to another grantee than the person intended, and therefore that there was no assent of the mind of the grantor to the creation of the instrument to which her signature wras fraudulently obtained, and hence that the writing was not her act. To sustain this position, counsel cite the fraudulent procurement of a deed deposited as an escrow from the depositary by the grantee, (Everts v. Agnes, 4 Wis. 343, and 6 id. 453;) the furtively purloining without the knowledge or consent of the maker of a note and mortgage deposited in escrow, (Andrews v. Thayer, 30 Wis. 228;) and the cases of deeds obtained bv larceny and like means. Secs. 190,191 of Bishop on Contracts; Tisher v. Beckwith, 30 Wis. 55; Burton v. Boyd, 7 Kas. 31, and Ayres v. Probasco, 14 Kas. 196, are also referred to. The principle announced in the various decisions presented to us by counsel for the plaintiff is not applicable. The question of the assent of the grantor need not be considered now. In this case, it appears from the findings of the court that on the 26th day of January, 1880, Lena NcNeil, at the request of Payson, accompanied him to the office of a notary public, and upon reaching the office signed her name to the deed in the presence of the notary, without any examination, and then acknowledged its execution, and delivered it to Payson to be filed for record. He deposited the deed for record on the next day at 11:30 o’clock A. M., and it was thereupon recorded in the book of deeds in the office of the register. The conduct of the grantor of this deed was such as to forbid her to deny its validity so as to affect the rights of persons holding the position of bona fide purchasers of the premises for value. Where parties are inattentive and careless in the execution of conveyances of real estate, the law estops them from setting up title as against a bona fide purchaser for value under such conveyance. As was said in Somes v. Brewer, 2 Pick. 184, cited upon the former hearing in this case, (Jordan v. McNeil, 25 Kas. 459:)

“It is a general and just rule, that when a loss has happened which must fall on one of two innocent persons, it shall be borne by him who is the occasion of the loss, even without any possible fault committed by him, but more especially if there has been any carelessness on his part which caused or contributed to the misfortune. A man can scarcely be cheated out of his property, especially of real estate, in such a manner as to give an innocent purchaser a right to hold according to the principles which have been mentioned, without a degree of negligence on his part which should remove all ground of complaint. Suppose him to be prevailed upon by fraudulent representations to execute a deed without asking advice of friends or counsel, he has locus penitentice when he goes before a magistrate to acknowledge it.”

2. Deed procured by fraud; estoppel of grantor. Counsel claim that as the grantor employed a lawyer to draft for her the deed which she intended to execute, and as she examined the contents of it on its first presentation to-her, and found it drafted according to her wishes, she had the right to rely implicitly upon the integrity of the lawyer and sign the conveyence produced in the office of the notary by him, without question or examination; that she exercised due caution in examining the deed when first presented, and any further examination was unnecessary. The lawyer who-prepared the deed for her was acting as her agent, and she confided in him. If she chose to relv upon his\ statements and thereby received injury, she must suffer the consequences of her misplaced confidence, rather than an innocent third person. Where a person not illiterate or of feeble mind, possessed of legal capacity to make a contract, executes and acknowledges a deed without ascertaining its character and extent, upon the representations of another, he puts confidence in that person, and if injury ensues to an innocent third person by reason of that confidence, his act is the means of that injury and he ought to answer to it. (Chapman v. Rose, 56 N. Y. 137.) Here it appears that the grantor unwittingly fell into the hands of a dishonorable and dishonest lawyer, (In re Payson, 23 Kas. 757,) and trusted to his integrity. But he betrayed that, trust, and wrongfully obtained her signature and acknowledgment to the deed, conveying the property to himself. This deed was afterward recorded, and the consequences thereof. must fall upon the grantor of the fraudulent deed, rather than upon those who have paid their money upon the faith of the conveyance. The deed, therefore, in our opinion, was not and is not a nullity. It was effectual to pass the estate so that the deed and the mortgage from the fraudulent grantee to defendants, if they may be regarded as bona fide purchasers, are valid. (Bloomer v. Henderson, 8 Mich. 405; Burson v. Huntington, 21 Mich. 415; Douglas v. Matting, 29 Iowa, 498; Putnam v. Sullivan, 4 Mass. 45; Bishop on Contracts, § 169; Cook v. Moore, 39 Tex. 255; Deputy v. Stapleford, 19 Cal. 302.)

3. Possession ofland; notice; This brings us to the consideration of the possession of the premises by Lena McNeil at the date of the execution of the mortgage, a subsequent conveyance. Were the defendants notified by such possession of the fraud of their grantor? Were the defendants bound to inquire of Lena McNeil what interest she claimed or represented ? We have time and again stated that open, notorious, unequivocal and ex-elusive possession or real estate under an apparent claim of ownership is notice to the world of whatever claim the possessor asserts, whether such claim be legal or equitable in its nature. (Johnson v. Clark, 18 Kas. 164; School District v. Taylor, 19 Kas. 292; Tucker v. Vandermark, 21 Kas. 263.) This rule, however, does not in the nature of things apply to a vendor remaining in possession. A purchaser from the grantee of the party in possession need not inquire whether such party has reserved any interest in the land conveyed. So far as the purchaser is concerned, the actual occupant’s deed is conclusive upon that point. The object of the law in holding possession constructive notice, is to protect the possessor from the acts of others who •do not derive their title from him, not to protect him against his own acts, not to protect him against his own deed.

4. Adverse possession; presumption. Therefore, where a grantor executes and delivers a i i * n , deed ot conveyance to go upon record, he says ^ o l is/ to the world: “ Though I am yet in the possession of the premises conveyed, it is for a temporary purpose, without claim of right, and merely as a tenant at sufferance of my grantee.” The great weight of the authorities supports this conclusion. Thus, Wade on Notice says:

“ So the possessor may by his own act, in putting upon the record an instrument inconsistent with title in himself, or by executing and delivering such a recordable instrument, be estopped from relying upon his possession as evidence to subquent purchasers that he claims title to the premises. In the case cited, defendant had conveyed the land in question to ■one in whom he placed confidence, subject to a secret trust. The deed of conveyance was absolute on its face, and was ■duly recorded. Relying upon the record, plaintiff purchased the premises from the apparent grantee for value, who, in making the sale, was guilty of a breach of trust. But the plaintiff took without-knowledge or notice of the trust, although the defendant, after making the conveyance, remained in possession and openly exercised acts of ownership over the property.” (Sec. 299.)

Bigelow on Fraud states:

“The rule of notice by possession does not apply in favor ■of a vendor remaining in possession, so as to require a purchaser from his grantee to inquire whether he has reserved any interest in the land conveyed. So far as the purchaser is concerned, the vendor’s deed is conclusive. Having declared by his deed that he makes no reservation, he cannot afterward set up any secret arrangement by which his grant is impaired.” (Pp. 295-6.)

Washburn on Real Property also says:

“Nor will the continued possession by the grantor of land, ■after the making of his deed, be notice of a defeasance held by him which is not recorded.” (Vol. 2, 3d ed., p. 66.)

The following decisions are in accord with these elementary writers: Van Keuren v. Central Rld. Co., 9 Vroom (38 N. J. L.), p. 165; Newhall v. Pierce, 5 Pick. 450; New York Life Ins. Co. v. Cutler, 3 Sandf. Ch. 176; Kunkle v. Wolfersberger, 6 Watts, 126; Hennesey v. Andrews, 6 Cush. 170; Crossen v. Swoveland, 22 Ind. 434; Scott v. Gallagher, 14 Serg. & R. 333; 2 Leading Cases in Eq., pt. 1., p. 118; Juvenal v. Patterson, 10 Pa. St. 203. See also 4 Cent. L. J. 122, 124; Bloomer v. Henderson, supra; Deputy v. Stapleford, supra; Cook v. Moore, supra.

In this case, as the defendants had no knowledge of the fraud practiced upon the plaintiff by their grantor, as they examined the records of the office of the register of deeds of Cowley county, and found recorded there the title in fee simple in Payson before they took their conveyances from him or paid out their money, and as in all the matters connected with their transactions they acted in good faith, they caijnot be regarded as other than holding the position of bona fide purchasers; and the possession of the land by the grantor of their grantee was, at the most, merely constructive notice to them that she was a tenant at sufferance of'her grantee.

Counsel for plaintiff make the further claim that plaintiff held the premises by an adverse possession at the time of the execution of the mortgage and conveyance to defendants, and therefore that Payson could not convey the land. The conclusion already obtained justifies us in saying that the grantor of Payson did not have in law, adverse possession as to bona fide purchasers after the execution and recording of her deed. Both the innocent mortgagee and the bona fide purchaser had the right to treat her merely as a tenant at sufferance of her grantee, at the execution of the conveyance to themselves.

The judgment of the district court will be affirmed.

All the Justices concurring.