For over twenty years Mrs. Parker permitted her real estate in Bridgeport to stand of record in her husband's name; mortgages thereon to be assumed by him, or made as part of the purchase price; and conveyances thereof to be made, and mortgages to be placed thereon, by him. As to all the world the public land records proclaimed him the owner. The plaintiff accepted him as a surety upon an officer's receipt, given in place of an attachment secured by the plaintiff upon certain property, in reliance upon his *Page 103 ownership of this property as disclosed by the public records and as stated by him. In fact, his wife was the owner of this property; and the question at issue is whether the transfer to her of this property, made subsequent to the contingent liability incurred by her husband as a surety, and accepted by the plaintiff in reliance upon his ownership, as disclosed by the public records and declared by him, is superior to the plaintiff's right in the property.
The plaintiff claims that Mrs. Parker is estopped from setting up her claim of ownership ahead of his claim against the surety, which he has reduced to judgment, and that, as against him, the transfers to her were in law constructively fraudulent. The foundation of this claim must rest upon the assertion that the plaintiff was, at the inception of the suretyship, a creditor of Mr. Parker. The liability of Mr. Parker as a surety was contingent, though the receipt was absolute in terms. Fowler v. Bishop, 31 Conn. 560, 562. The relation of debtor and creditor between Mr. Parker and the plaintiff arose at the moment he became a surety. This liability was in law as assured as though the plaintiff had then sold Mr. Parker a bill of goods, or loaned him a sum of money. Debt, in the sense in which it must here be regarded, denotes "any kind of a just demand." We have held that one who holds an unliquidated claim against another is his creditor under the foreign attachment statute. New Haven Saw-MillCo. v. Fowler, 28 Conn. 103, 108. So far as we are aware, the authorities generally hold the person for the payment of whose debt another has become contingently liable, to be a creditor. Thus in Thompson v.Thompson, 19 Me. 244, 251, where a bond with surety was given by a guardian to secure the ward against official neglect or misconduct, it was held that the relation of debtor and creditor arose at the time of the *Page 104 signing of the bond, and that the obligee, or those whom the bond was designed to protect, might impeach any conveyance made after its date, though prior to any breach of the bond. So it was held that the holder of a promissory note was a creditor of the indorser or guarantor thereon, notwithstanding the liability of an indorser or guarantor was contingent, within the provisions of the statute avoiding all gifts made to defraud creditors. Crocker v. Huntzicker, 113 Wis. 181,88 N.W. 232. So it was held a landlord was an existing creditor of his tenant as to rent to become due under the lease, and therefore a voluntary conveyance by the tenant might be set aside, and the property so conveyed subjected to the landlord's claim for rent falling due after the conveyance. O'Brien v. Whigam,41 N.Y.S. 40. In Hanna v. Hurley, 162 Mich. 601, 604,127 N.W. 710, it was held that an obligee on a bond given for costs might have set aside a conveyance of stock, contrary to the bulk-sales act, though the liability of a surety was contingent at the time of sale. The court said: "It is urged by appellant that George D. Hanna's liability upon the bond could not be fixed until judgment upon appeal, and therefore that the obligee in the bond was not, at the time of the sale, one of his creditors. . . . It cannot be said that George D. Hanna's liability was not fixed at the moment he signed the bond. It was fixed in amount, though contingent upon the failure of his principal to prosecute his appeal, and reverse or pay the judgment."
Most of the cases where the question of contingent liability arose, are those between a surety and the principal obligees upon a bond or other instrument; or between an indorser or guarantor and maker, where the one contingently liable for the debt of another has paid it, and is seeking to recover of the principal of the bond or other instrument, or the maker or guarantor of the *Page 105 note or other instrument. Our investigation satisfies us that the law is well settled that the liability begins when the engagement of the surety, indorser, or guarantor begins. Washington v. Norwood, 128 Ala. 383,389, 30 So. 405; Hatfield v. Merod, 82 Ill. 113; Dudley v.Buckley, 68 W. Va. 631, 70 S.E. 376; Graeber v. Sides,151 N.C. 596, 66 S.E. 600; Whitehouse v. Bolster,95 Me. 458, 460, 50 A. 240; Fortune v. Cassidy, 140 Ill. App. 580;McLaughlin v. Bank of Potomac, 48 U.S. (7 How.) 220; Van Wyck v. Seward, 18 Wend. (N. Y.) 375. The obligation of Mr. Parker as surety attached when he signed the receipt; the relation of debtor and creditor, between the surety and the plaintiff, arose at that time.
We are now to inquire whether the plaintiff creditor can cause to be set aside a conveyance by his debtor to the debtor's wife of real estate, of which the real ownership was in the wife, but the legal title to which had been placed in the husband, and so appeared of record for many years, and in reliance upon the record title and the declaration of ownership by the husband, the plaintiff had extended to him credit. The defendant wife was without intent to wrong the plaintiff, and without knowledge that her husband owed the plaintiff or any one else. The plaintiff was equally innocent. Unless he can compel the appropriation of this property to the payment of his debt he must lose it.
Mrs. Parker put it in the power of her husband to secure this credit on the faith of his ownership of her property. She caused the land records to declare that he owned this property. The plaintiff had the right to rely upon the title as it appeared of record. The act of the real owner in placing the record title of property in the name of another precludes her from denying his title as against one who has extended a credit in reliance upon the title which she has vested in the other. The *Page 106 right of the creditor arises from the act of the owner, and does not depend upon the actual title but upon the apparent title. The true owner is barred from asserting her title against the creditor by her own act. It would be inequitable to permit the assertion of her right to the injury of the innocent creditor. She is estopped from maintaining her ownership, otherwise injustice would be done the creditor. Between the innocent owner and the innocent creditor, the owner, whose act led to the wrong to the creditor, must suffer the loss.
The rule of equitable estoppel is as applicable to a married woman who has placed the title to her real estate in her husband, who has thereby obtained a credit, as though she had put the title in the name of a third party. Galbraith v. Lunsford, 87 Tenn. 89, 97,9 S.W. 365; 2 Pomeroy on Eq. Jurisp. (3d Ed.) § 814. The authorities so holding are numerous. "With the knowledge and assent of Mrs. Hauk, the title to this property stood of record, from November 9th, 1889, until January 13th, 1891, in the name of her husband. During this period he purchased from the complainants the goods for which their judgment was obtained. Upon the strength of his apparent ownership of such property he obtained credit; and it is neither just nor equitable that she should now, as against them, be permitted to assert that this property all the while belonged to her."Hauk v. VanIngen, 97 Ill. App. 642, 650, affirmed196 Ill. 20, 63 N.E. 705; Smith v. Willard, 174 Ill. 538,51 N.E. 835; Mertens v. Schlemme, 68 N.J. Eq. 544, 550,59 A. 808; Warner v. Watson, 35 Fla. 402, 421,17 So. 654; Lawrence v. Guaranty Investment Co., 51 Kan. 222,32 P. 816; McCormick Harvesting Machine Co. v.Perkins, 135 Iowa 64, 68, 110 N.W. 15; 16 Cyc. 773, 775; 20 id. 606; 2 Beach on Eq. Jurisp. § 1103; note to 30 L.R.A. (N.S.) 3.
The enforcement of this rule does not depend upon *Page 107 whether there was actual fraud, although this element is often present, but upon the inequity of the wife holding out to the world her husband's ownership, and then denying it, to the prejudice of one who has extended credit upon the faith of her act. Of a reply purporting to set up an equitable estoppel, we said: "It is claimed that these averments were not sufficient, because no bad faith, wilful wrong, or gross carelessness is charged. No such charges were necessary. . . . It is not his intent, so much as the result of his conduct, which determines his liability." Canfield v. Gregory, 66 Conn. 9, 16,33 A. 536; Galbraith v. Lunsford, 87 Tenn. 89,9 S.W. 365; 2 Pomeroy on Eq. Jurisp. (3d Ed.) §§ 803, 804, 814.
There are authorities which hold the wife's fraud the determinative element in the proof of her equitable estoppel, as, for instance, those of Texas and Missouri; but the great weight of authority is against this position and in accord with the doctrine we adopted in Canfield v.Gregory. Unless the circumstances be such as naturally to mislead another, one of the indispensable elements of an equitable estoppel is absent. In an early case we thus stated the doctrine: "Therefore, it has been holden, that if the owner of goods voluntarily permit another to hold himself out to the world as being the true owner, and for this purpose, entrust him with the exclusive possession or other indicia of title, under circumstances which would naturally tend to mislead, he shall be concluded by the sale of it to an innocent or mistaken purchaser."Baldwin v. Potter, 12 Conn. 473, 482. InCanfield v. Gregory, 66 Conn. 9, 17, 33 A. 536, we said: "It is true that it does not extend to acts or representations not naturally calculated to mislead, and on which others had no right to rely." Pickard v. Sears, 6 Adol. El. 469; Laing v. Evans, 64 Neb. 454, 459, 90 N.W. 246.
Were the circumstances naturally calculated to mislead the plaintiff into the belief that Mr. Parker was the *Page 108 owner, and did he have the right to rely upon this belief?
Mr. Parker was financially interested in the Chemical Company; he represented that he owned this property; the plaintiff looked up the public records, and ascertained that by them, for years, he had been the owner, and that he had, for over twenty years, owned property of record in Bridgeport, assumed mortgages upon purchases, and given mortgages upon purchases. The titles were such that the most conservative investor or institution would have accepted them and loaned upon their faith. These circumstances were naturally calculated to mislead the plaintiff as they did. The plaintiff did rely upon these titles of record, released his attachment against the Chemical Company, and in its stead accepted an officer's receipt with Mr. Parker as surety. It would be difficult to conceive of a stronger case of equitable estoppel. Any other holding would do violence to the faith which, time out of mind, we have given to our registry laws. With inflexible adherence we have made every title to land, so far as practicable, appear of record. We have held the record constructive notice to all the world of land titles. We have authorized reliance to be placed thereon. We have sustained contracts and conveyances made upon their faith. We cannot hold that a credit, extended in reliance upon the land records, must yield to the equitable owner of the title without doing irreparable injury to the registry laws and going counter to our decisions.
The maintenance of our system of registry of titles is of the greatest public importance, and he who acts in reliance upon the record has behind him not only the natural equities of his position, but also the especial equity arising from the protection afforded every one who trusts the record. Rosenbluth v. DeForest HotchkissCo., 85 Conn. 40, 47, 81 A. 955; Beach v. Osborne, *Page 109 74 Conn. 405, 411, 50 A. 1019, 1118; Ives v. Stone,51 Conn. 446, 456; Wheeler v. Young, 76 Conn. 44, 50,55 A. 670.
The test is whether the act of the wife was naturally calculated to cause the plaintiff to extend credit to her husband. It is not, as has sometimes been suggested, whether the wife had reason to expect credit would be extended to her husband. If, however, this were the test, the facts found make it perfectly clear that she did have such reason to expect. Her purpose in placing the property in his name was "because of her peculiar ideas that a husband should always appear as the head of the house." This has but one meaning; she purposed giving him standing and financial responsibility in the community. The purpose was identical with that inKennedy v. Lee, 72 Ga. 39, because the wife "thought it would look better" for him to hold the title to her real estate.
She is by law presumed to know that the titles of record, through all these years, would be constructive notice to all the world that her husband was their owner. She gave him, by her act, credit to either assume mortgages upon each of the several properties she permitted him to own, or to give mortgages thereon as part consideration for the purchase price, or to make mortgages thereon after the purchase. His title of record gave him a credit by which he procured a mortgage on the very property on Dewey Street upon which the plaintiff is seeking to foreclose his lien. She loaned him $1,000, which he had, to her knowledge, lost in the company whose credit he was protecting by becoming its surety. Under these circumstances it could not be said that she could not reasonably anticipate that he might use the credit she had given him. The mere fact that she had never known that he had had any other creditors, and he, in fact, had had none, is of no consequence, and *Page 110 very far from a finding that she could not reasonably anticipate that he would use the credit given him by his apparent ownership.
The trial court relied for its decision upon the case ofClarke v. Black, 78 Conn. 467, 62 A. 757. There is a marked difference between that case and this. There the relation of debtor and creditor existed between the husband and wife, and was the consideration of the conveyance; in this case it is expressly found that this relation formed no part of the consideration of the transfer. In that case it did not appear that the creditor seeking to set aside the conveyance relied upon the husband's ownership, or upon his title of record, in extending him credit. And, further, the question of the wife's estoppel does not appear to have been raised. This case is governed by the principles involved in Sanford v. DeForest, 85 Conn. 694, 84 A. 111.
There is error, the judgment of the Court of Common Pleas is reversed, and the cause remanded with instruction to render judgment for the plaintiff in accordance with this opinion.
In this opinion PRENTICE, C. J., and BENNETT, J., concurred.