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PHILIP PELL v. WILLIAM C. McELROY, JOHN K. KELLY, and GEORGE HEARST. SUPREME Court of CALIFORNIA 36 Cal. 268; 1868 Cal. LEXIS 186 October 1868. Cause tried by the Court without a jury, and upon specific findings of facts Court rendered judgment against defendant McElroy for the amount due upon the note.
PHILIP PELL v. WILLIAM C. McELROY, JOHN K. KELLY, and GEORGE HEARST. SUPREME Court of CALIFORNIA 36 Cal. 268; 1868 Cal. LEXIS 186 October 1868. Cause tried by the Court without a jury, and upon specific findings of facts Court rendered judgment against defendant McElroy for the amount due upon the note.
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PHILIP PELL v. WILLIAM C. McELROY, JOHN K. KELLY, and GEORGE HEARST. SUPREME Court of CALIFORNIA 36 Cal. 268; 1868 Cal. LEXIS 186 October 1868. Cause tried by the Court without a jury, and upon specific findings of facts Court rendered judgment against defendant McElroy for the amount due upon the note.
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PHILIP PELL v. WILLIAM C. McELROY, JOHN K. KELLY, and GEORGE
HEARST
[NO NUMBER IN ORIGINAL]
SUPREME COURT OF CALIFORNIA
36 Cal. 268; 1868 Cal. LEXIS 186
October 1868
PRIOR-HISTORY: Appeal from the Hearst and Kelly separately answered,
District Court, Twelfth Judicial and have separately appealed, the District, City and County of San former from the judgment, and the Francisco. latter from the judgment and order denying him a new trial. COUNSEL: S. Heydenfeldt, J. H. The facts, as found by the Court Saunders, and H. C. Hyde, for below, are fully justified by the Appellants. evidence; they are substantially as follows: On the 10th of December, Charles Halsey, for Respondent. 1862, plaintiff was, and for ten years theretofore had been, in the actual The points and authorities made and possession, by his personal residence cited in the briefs of counsel are thereon, substantial inclosure stated and discussed in the opinion of thereof, and cultivation by tenants the Court. paying him rent therefor, of every part of the land described in the JUDGES: Sprague, J. amended complaint, and during the whole of such time had claimed right OPINION BY: SPRAGUE to the said premises in virtue of such residence thereon, inclosure, and OPINION cultivation thereof. While so in the This is an action for the recovery possession, plaintiff, on the said of the amount due upon a promissory 10th day of December, 1862, executed note made by the defendant McElroy to and delivered to defendant McElroy a plaintiff for the purchase price of deed of conveyance, whereby he sold certain real estate described in the and conveyed to him the said premises, amended complaint, and to enforce the which deed was properly acknowledged payment of such amount as a vendor's on the 11th day of December, 1862, and lien upon such real estate. The cause duly recorded on the 16th day of was tried by the Court without a jury, December, 1862, in the Recorder's and upon specific findings of facts office of the City and County of San the Court rendered judgment against Francisco. The consideration named in defendant McElroy for the amount due such deed of conveyance was four upon the note, and decreed a sale of thousand dollars, and although the the described premises in satisfaction same was therein recited as having of such portion of the judgment as been paid, yet in fact it was not should remain unsatisfied on return of paid, and nothing, in fact, was paid execution on the judgment against by McElroy to plaintiff for such defendant McElroy. The defendant lands, or conveyance thereof; but McElroy made default; defendants contemporaneously with the execution and delivery of the deed, (December the 20th day of January, 1864, McElroy 10th, 1862,) it was verbally agreed by conveyed to defendant Hearst the and between plaintiff and defendant remaining part of said premises for McElroy that he, McElroy, should, the consideration of six thousand twelve months after that date pay to dollars, which was the full value of plaintiff or his order the sum of four the part so conveyed to defendant thousand dollars, with interest at the Hearst. At the time of the purchase by rate of one per cent per month, for defendant McElroy from plaintiff of said land and conveyance thereof; and the premises, December 10th, 1862, at the same time it was further defendant McElroy was and ever since verbally agreed by and between them, has been insolvent. that until said sum of four thousand dollars, and interest thereon as The Court did not find that defendants Kelly and Hearst, or either aforesaid, should be paid, the plaintiff should retain the of them, prior to their respective purchases, had any actual notice that possession, control, and use of the premises and every part thereof, and the purchase money of the premises from plaintiff by McElroy had not been receive the rents and profits of the same, as he, plaintiff, was then paid. enjoying, and had previously enjoyed The fact of open, notorious, and the same. At the same time defendant exclusive possession and occupation of McElroy executed and delivered to lands by a stranger to a vendor's plaintiff his certain promissory note title, as of record, at the time of a for said agreed purchase money and purchase from and conveyance by such interest, as aforesaid, payable to the vendor out of possession, is order of plaintiff, which has never sufficient to put such purchaser upon been paid, nor any part thereof, and inquiry as to the legal and equitable is now and continuously since its rights of the party so in possession, execution and delivery has been and and such vendee is presumed to have remained in the possession of the purchased and taken a conveyance from plaintiff, and has never been the vendor with full notice of all the negotiated or transferred by him to legal and equitable rights in the any one; and plaintiff, ever since his premises of such party in possession execution and delivery of the deed and in subordination to these rights; aforesaid to McElroy, has been and is and this presumption is only to be in the open, notorious, and visible overcome or rebutted by clear and use and occupation, by himself and his explicit proof on the part of such tenants, of the premises so by him purchaser, or those claiming under conveyed, and every part thereof; the him, of diligent, unavailing effort by same having been, during all that the vendee to discover or obtain period, and being still subject to the actual notice of any legal or exclusive dominion and use of the equitable rights in the premises in plaintiff, without any use or behalf of the party in possession. And possession of any part thereof by or when the location of the lands is such in the defendants, or either of them, as to render personal application to at any time or in any manner. After and inquiry of the occupant the execution and delivery by practicable, a purchaser failing to plaintiff of the aforesaid deed of the make such application and inquiry is premises to defendant McElroy, and no more entitled to be regarded a after the same had been duly purchaser in good faith than if he had acknowledged and recorded, to wit: on so inquired and ascertained the real the 28th day of February, 1863, facts of the case. McElroy conveyed to defendant Kelly a portion of the premises for and in Such, we understand, is the well consideration of eight hundred settled general rule of law in this dollars, which was much less than the State, sustained by preponderant actual value of the premises so authority of American and English conveyed to Kelly; and afterwards, on Courts. ( Hunter v. Watson, 12 Cal. 363; Lestrade v. Barth, 19 Cal. 675; of the Court in Woods v. Farmere, 7 Dutton v. Warschaur, 21 Cal. 609; Watts, supra: "This presumption, as it Landers v. Bolton, 26 Cal. 393; Fair is a wholesome one, ought not to be v. Stevenot, 29 Cal. 486; Killey v. easily overthrown. The duty of Wilson, 33 Cal. 693; Woods v. Farmere, inquiring into the foundation of a 7 Watts. 386; Williamson v. Brown, 15 notorious possession is not a grievous N. Y. 355; Grimstone v. Carter, 3 one, and is soon performed. Why, then, Paige Ch. 420; Tuttle v. Jackson, 6 should a purchaser be suffered to act Wend. 213; Gouverneur v. Lynch, 2 on probabilities as facts, at the risk Paige Ch. 300; Chesterman v. Gardner, of any one but himself, when a 5 Johns. Ch. 29; Buck v. Holloway, 2 moderate share of attention would J. J. Marshall, 180; Barbour v. prevent misconception and loss? The Whitlock, 4 Monroe, 196; Hopkins v. doctrine of constructive notice is Garard, 7 B. Monroe, 312; Pritchard v. undoubtedly a sharp one; but it is no Brown, 4 N. H. 404-5; Colby v. more so in regard to a notorious Kenniston, 4 N. H. 266; Allen v. possession than it is in regard to a Anthony, 1 Merv. 282; Taylor v. Baker, registry. Nor is it less reasonable; Daniels, 80; 2 Vesey, 437; 13 Vesey, for it certainly evinces as much 118; 16 Vesey, 249; 17 Vesey, S. C., carelessness to purchase without 433.) having viewed the premises, as to purchase without having searched the In the present case the question register." arises, whether the fact of open, notorious, and exclusive possession of The simple, independent fact of lands by a vendor thereof, after possession is sufficient to raise a transfer of his legal title thereto by presumption of interest in the deed, is sufficient to put a premises on behalf of the occupant. subsequent vendee of the same And we can discover no just or premises, while so in possession of rational ground for giving to this the original vendor, upon inquiry as fact less significance as notice to a to the equitable rights of such party purchasing the legal title from original vendor, and subject such one not in possession, in consequence subsequent purchaser to the same rules of the fact that such occupant had by as when a stranger to the title of his deed divested himself of the legal vendor, as of record, is in title. For instance, should a vendor possession. Upon this point, as in of lands make an absolute deed, which regard to the rule heretofore stated, is put of record, and immediately take the authorities are somewhat from the grantee a mortgage upon the conflicting. same lands to secure a part of all the purchase money, by the terms of which The reasons assigned for mortgage he is to retain the withholding the application of the possession until the entire purchase rule to the case of a vendor in money is paid, and such vendor and possession, proceed upon the ground mortgagee should continue in the that by his deed he has in the most exclusive possession with his mortgage formal manner divested himself of all unrecorded, it is very clear that, title and right of possession, and the under the decisions heretofore party subsequently purchasing is referred to, a party purchasing of his justified in acting upon the vendee while such a possession was in presumption that he continues in the vendor, would take the premises possession in subordination to the with presumptive notice of the title of his vendee. But the fact of equities of the occupant. So, if a possession is, of itself, inconsistent vendor of land make an absolute deed, with the legal effect of his deed and which is put of record, and take a immediate right of possession by his note for the purchase money, and vendee, and should not that fact immediately receive from his vendee a rather favor the presumption that some reconveyance by absolute deed not put right or interest in the premises of record, which, by a verbal still remains in him? In the language agreement of the parties, he is to the equitable rights of the original retain, with the possession, as grantor in possession as against security for the payment of the subsequent purchasers, says: "This is purchase money, while such possession undoubtedly a hard case for the continued it manifestly would operate purchasers, who supposed they were as presumptive notice of his equities getting a good title. But as the to purchasers of his grantee. So, in complainant was not aware of the this case, if before or at the negotiation for the purchase of the maturity of the note given by McElroy property, and therefore had no for the purchase money, he (McElroy) opportunity to apprise them of his had reconveyed the land to Pell in equitable claim, * * * it would be consideration of the surrender of his equally hard to deprive him of his notes, and then, before Pell had put property without consideration. the deed of record, and while he was Seymour and Welles were informed he still in the exclusive possession, was in possession, which, by the with his deed in his pocket, McElroy settled law of the land, was had sold and conveyed to defendants sufficient to put them on inquiry, and Kelly and Hearst, it would hardly be to deprive them of the defense of bona contended that they could be protected fide purchasers without notice of his as purchasers in good faith in a Court rights. And, in the language of Lord of equity. Eldon, having neglected to take the obvious precaution of inquiring as to An absolute deed divests the the nature and extent of the tenant's grantor not only of his legal title, interest in the property, they must but right of possession; and when such suffer the consequences of their grantor is found in the exclusive neglect." possession of the granted premises long after the delivery of his deed, The case of Hopkins v. Garrard, 4 here is a fact antagonistic to the B. Monroe, supra, involved the precise fact and legal effect of the deed; and question now under consideration, and we cannot appreciate the justice, in delivering the opinion of the sound reason, or policy of a rule Court, Mr. Chief Justice Marshall which would authorize a subsequent says: "But the fact that, purchaser, while such fact of notwithstanding his deed to Hopkins, possession continues, to give which acknowledged full payment, controlling prominence to the fact and Garrard, the grantor, remained in legal effect of the deed, in utter possession of the land, was an disregard of the other notorious indication that he had or claimed some prominent antagonistic fact of interest in the land, and should have exclusive possession in the original put the subsequent vendees on an grantor. He cannot be regarded a inquiry, by which they would have purchaser in good faith who easily learned that the purchase money negligently or willfully closes his was, in fact, unpaid, and probably eyes to visible pertinent facts, that Garrard was holding the indicating adverse interest in or possession as security for it. On the incumbrances upon the estate he seeks grounds of notice, therefore, implied to acquire, and indulges in from the possession, the lien of possibilities or probabilities, and Garrard for his purchase money is acts upon doubtful presumptions, when considered effectual against the by the exercise of prudent, reasonable subsequent purchase, even beyond the diligence he could fully inform effect of the lis pendens." himself of the real facts of the case. The point under consideration was The case of Grimstone v. Carter et not directly or necessarily involved al., 3 Paige Ch., supra, was one where in the cases, cited by appellants, of the original grantor was in possession Dawson v. Danbury Bank, 15 Mich. 489, at the time of a subsequent purchase and White v. Wakefield, 7 Sim. 401. from his grantee, and Mr. Chancellor The former case involved a controversy Walworth, in his opinion sustaining between the purchaser of the estate on foreclosure of a senior mortgage and per se was notice to a subsequent junior mortgagees of the same estate, purchaser of the interest of the and the question presented was as to occupant, and applies to all parties the effect of such purchase as against in possession indiscriminately, the junior mortgagees, not parties to whether strangers to or directly the foreclosure suit, the same having connected with the title, as evidenced been made for the benefit of the by the deed relied upon by the mortgagor, who continued in purchaser. possession. In the latter case the We are unable to appreciate the Vice Chancellor expressly says: "This is not a case in which the Court ought force of the reasoning, and unwilling to adopt the conclusions therefrom, to recognize that there was a lien on the estate for the purchase money announced in that case. Can a party be regarded as a purchaser in good faith unpaid." The estate was purchased by trustees, with a trust fund, and the when he has notice of a fact inconsistent with the legal effect of vendor, (White,) with a full knowledge of that fact, allows one of the his vendor's title, and fails to seek an explanation of such inconsistent trustees (Wakefield) to retain two thousand pounds of the purchase money fact from the source most likely to afford it? to his individual use, for four per cent, without the knowledge or consent We prefer to adopt the more of his co-trustees, makes a deed, rational doctrine announced by Mr. receipts in full for the purchase Justice Selden, in delivering the money, and then leases the estate at opinion of the Court in the case of an annual rent of one hundred pounds. Williamson v. Brown, 15 N. Y., supra. "This mode of dealing," says the Vice Says that learned Judge: "The true Chancellor, "was one which makes the doctrine on this subject is, that when case differ essentially from the a purchaser has knowledge of any fact common case between vendor and sufficient to put him on inquiry as to purchaser, when, from mistake or for the existence of some right or title the convenience of the purchaser, it in conflict with that he is about to happens that the estate is conveyed purchase, he is presumed to have made without payment of the purchase money the inquiry and ascertained the extent in full; for, as White knew that the of such prior right, or to have been estate was to be purchased with trust guilty of a degree of negligence money, he ought to have taken care equally fatal to his claim to be that such an arrangement was made as considered as a bona fide purchaser." that the purchase money might be safe and forthcoming. But this transaction The continued exclusive possession is totally different; for the money of a vendor after his formal was left under the absolute control of conveyance of the legal title is a E. Wakefield, and as White did so deal fact in conflict with the legal effect with one of the trustees without the of his deed, and is presumptive concurrence of the co-trustees or evidence that he still retains an their cestuis que trust, he cannot be interest in the premises, and is permitted, as against them or the sufficient to put a purchaser upon tenants and their trustee, to say that inquiry, and subject him to the he has a right to consider the estate general rule heretofore announced in as virtually mortgaged to him for the case of the party in possession being unpaid part of the purchase money." a stranger to the title as of record.
In the case of Scott v. Gallagher, We are clearly of opinion, that the
14 Serg. and R. 433, relied upon by facts of this case, as found by the appellants, the reasoning of the Court below, are sufficient to justify learned Judge who delivered the the judgment, and that the same should opinion of the Court was directed to be affirmed. the question as to whether possession Ordered accordingly. 120D9W ********** Print Completed **********
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In Re Rennie's Estate. Addie B. Taggart, Administratrix of The Last Will and Testament and The Estate of Mary Isabella Rennie, Deceased v. United States, 430 F.2d 1388, 10th Cir. (1970)