General Insurance v. United States Insurance

Tuck, J., delivered the opinion of this court. The chancellor correctly decided the two propositions, discussed in his opinion, filed on the 11th of April 1847, (3 Md. Ch. Dec.) 381 that is to say, that the deeds are within the registry acts, and that the appellant has not shown that the ji.ppellee had notice of the deed of January 1834, when that of March following was executed. The first of these questions has since been considered by this court, and determined in accordance with the views of the chancellor in the present case; and, after further consideration upon the authorities and argument presented at the hearing of this appeal, we see no reason to doubt the correctness ⁵²⁴ of the decision then made.

Alderson vs. Ames, 6 Md. Rep., 52 . The same doctrine was recognized in Watson vs. Bane, 7 Md. Rep., 117 , where the right of a mortgagee of an equitable title, similar to the present, was established. See, also, 1 Johns. Ch.

Rep., 394 , Parkist vs. Alexander, where the chancellor, upon the words of the New York statute, said that it embraced mortgages of equitable titles. We consider the language of our registry acts equally as comprehensive, and that they must have the same application. They were designed to avoid abuses and deceits by mortgages and pretended titles, and, for the protection of creditors and purchasers, should be construed so as to effect that end. 1715, ch. 47, sec. 8. 1766, ch. 14. 1825, ch. 203. 15 Penn. State Rep., 322.

The present case shows the propriety of this interpretation. The mortgagor was at the time extepsively engaged in speculation. His operations were of such a character as to cause daily changes in his property, and his pecuniary means. He had transactions with the appellant, which sufficiently indicated to that company the character of his business.

They dealt with him, and advanced money on the faith of this property, which they permitted him to hold, even after the time limited in the mortgage for the payment of the debt, although it contained a power in the company to sell, under which the appellant might have' proceeded, and thereby, most probably, have prevented the appellee from making advances on the same property. It does not appear why the deed was withheld from, record. It would seem, however, from the execution and acknowledgment, that it was intended to have been recorded, because, if designed to operate only as the assignment of a right in equity, these formalities need not have^ been resorted to. It would work great injustice, and, in many cases, gross frauds, if such transactions were not within the registry acts, and the construction notv contended for by the appellant, cannot be accepted by the court, without subjecting the community to such risks.

Upon the question of notice this court said, in Winchester’s case, 4 Md. Rep., 231 , that “actual knowledge must be shown by proof, or at least such circumstances must be proved as would ⁵²⁵ have been sufficient to put the party on inquiry.” See, also, 1 Md. Rep., 403 , Price, et al., vs. McDonald. Applying this principle to the present case, we have not been able to discover any sufficient ground for denying to the appellee the priority claimed by it. The case must be so clear as to satisfy the mind, that the allowance of the claim would be a fraud on the party setting up the first deed. In Wyatt vs. Barwell, 19 Ves., 435, it was said: “A registered deed stands upon a different footing from an ordinary conveyance.

It has been much doubted, whether courts ought ever to have suffered the question of notice to be agitated as against a party who has duly registered his conveyance; but they have said, we cannot permit fraud to prevail, and it shall only be in cases where the notice is so clearly proved as to make it fraudulent in the purchaser to take and register a conveyance in prejudice to the known title of another, that we will suffer the registered deed to be affected.” And the same principle had been recognized by Lord Hardwicke in Hine vs. Dodd, 2 Atk., 235, who said, “though there are strong circumstances of notice before the execution of the mortgage, yet, upon mere suspicion only, I wdll not overturn a positive law;” but, he added, “apparent fraud, or clear and undoubted notice, would be a proper ground for relief.” See, also, Dey vs. Dunham, 2 Johns. Ch. Rep., 182. No satisfactory conclusion, in aid of the appellant’s pretensions, can be drawn from the testimony of Mr. Freeman'.

The record shows so many mistakes in his recollection, as to matters of facts, that we must suppose he had no very clear conception of his own affairs at the times at which he spoke of them. In his answer, prepared in March 1836, two years after these deeds were executed, he professes to give a relation of his business with these companies, and, in October 1849, when examined under the commission, he confidently referred to that answer, and offered to restate the same matters as part of his evidence, yet, on the cross-examination he shows,, that he was greatly mistaken in particulars very material to the merits of the controversy. Reliance was placed in argument on his statement, that Neff knew as much of his affairs as he himself ⁵²⁶ did, and the inference was deduced, that he must have known of this mortgage; but we think this by no means a necessary conclusion, when we consider how his information was acquired. It is certain that these frequent conversations did not keep him advised of other matters, for he did not know of the deed to Poultney; if we are to credit every thing that appears under the commission, Freeman, himself, must have forgotten that deed, because he offered, as security for the loan he was asking, of the appellee, the very property which he had conveyed to Poultney, and when it was mentioned to him by Mr. Teackle he had so far forgotten the transaction as to misstate the facts.

Neff does not appear to have overlooked any thing necessary to make his company secure. He placed the business in the hands of counsel, and if he had been advised of the deed to the appellant, or had had reason to suspect its existence, we think we should have heard something of it in the progress of the searches and investigations of title made by Mr. Teackle. As far as this record discloses, we find, that whatever were the confidential relations between them, and -however well informed as to each others affairs, when a matter of business arose Neff did not rely on Mr. Freeman’s statement alone, but dealt with him as any prudent man would deal with another, by resorting to counsel and the public records where evidence of titles is usually found. It is reasonable to suppose that they had frequent conversations about their affairs, as they were engaged in the same kind of operations, but the information acquired from such conversations, which do not appear to have related to any specific transaction, and which do not enable this witness to say, except inferentially, that Neff had knowledge of the mortgage, is not such notice as the law