Busey v. Reese

Bartol, G. J., delivered the opinion of the Court. On the 5th day of October, 1870, Eichelberger borrowed from the appellee three hundred dollars, and on that day executed a mortgage of certain leasehold property, to secure its payment, the mortgage was, after its execution, handed to Eichelberger, who promised to have it recorded but failed- to do so, retaining it in his own possession till the 29th day of October, 1870, when ²⁶⁷ at 12J o’clock P. M., it was recorded. In the meantime, on the 25fch day of October, 1870, Eichelberger executed to the appellant, an absolute deed of conveyance of the same property, which was recorded before the mortgage,' viz: on the 29th day of October, 1870, at 11-| o’clock, A. M. The appellant had no notice or knowledge of the existence of the mortgage, at the time the deed to him was executed and recorded; it was made “ in consideration of a sum of money then and for some time previous due to him from Eichelberger; ” or as charged in appellee’s bill of complaint “in settlement and satisfaction of a past indebtedness long overdue and unpaid.” The single question for our consideration, is which of the parties is entitled to priority ; and this we think depends upon the true construction of the Code, Art. 24, sec. 16, which is in these words: “ Where there are two or more deeds conveying the same lands, or chattels real, the deed or deeds which shall be first recorded according to law shall be preferred, if made bona fide and upon good and valuable consideration. This section to apply to all deeds of mortgage, and to all other deeds or conveyances, to the validity of which recording is necessary.” It is conceded that the deed to the appellant was made bona fide, but it is contended that although first recorded, it is not entitled to priority, becaq.se the consideration was a pre-existing debt due from the grantor to the grantee; which, it is said, is not a “good and valuable consideration” within the meaning of the Code.

In support of this position, the counsel for the appellee has cited several cases, involving the question, when and under what circumstances, a party claiming to hold property by purchase or assignment from one having an imperfect title, will be protected as a bona fide purchaser for value, against the lawful owner, or one holding a prior equity. ²⁶⁸ On this question Ratcliffe vs Sangston, 18 Md., 383 , has been relied on by the appellee’s counsel as conclusive of the present case. It was there held that where a party had purchased goods by means of false and fraudulent representations, he could not defeat the right of the defrauded vendor to reclaim them, by making a voluntary assignment to trustees for the benefit of his creditors. The nature of the consideration required to make a transfer of title from a fraudulent vendee valid, as against the defrauded vendor, was there explained, and it was decided that the assignees were not bona fide purchasers for a valuable consideration; but stood in the position of the assignor, and took the property subject to all the equities which were binding before the assignment. Ratcliffe vs. Sangston, was decided in conformity with the well settled doctrine of Courts of Chancery, with respect to what constitutes a bona fide purchaser for value, entitled to protection against antecedent equities, and is in accordance with the current of authorities.

The question as respects the effect of an assignment for the benefit of creditors, has been