BEACH v. FAUST ET AL

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District Court of Appeal, Fourth District, California.

BEACH v. FAUST ET AL.*

Civ. 1303.

Decided: April 21, 1934

Kemp, Partridge & Kemp and Thomas C. Ridgway, all of Los Angeles, and Herbert C. Kelly, of San Diego, for appellants. Powell & Powell and Hubert F. Laugharn, all of Los Angeles, for respondent.

This action involves the title to a one–third interest in 30 acres of unimproved and unoccupied land in Kings county. The respondent claims under a court sale in a bankruptcy proceeding while the appellants claim under quitclaim deeds from the bankrupt and another party.

The land was conveyed by deed in 1910 to B. W. Marks and two others, each holding an undivided one–third interest. Prior to the commencement of this action, the appellant Faust acquired the interests of the other two parties and this controversy relates only to the one–third interest formerly owned by Marks. Marks was adjudicated a bankrupt on January 28, 1929, in the United States District Court for the Southern District of California, Central Division, which district includes Kings county. Marks failed to include this property in the schedule of assets filed and the trustee in bankruptcy did not learn of its existence until late in 1929, at which time proceedings were taken to sell it as the property of the bankrupt estate and the same was sold to F. A. Beach, the sale being confirmed on January 7, 1930. A deed from the trustee and a certified copy of the order confirming the sale were recorded in Kings county on January 30, 1930, and it is admitted that prior to that time no document in connection with said bankruptcy matter had been recorded in that county.

In the meantime, one T. A. Slocum went to Marks and secured from him a quitclaim deed dated May 31, 1929, for which he paid him $100. With reference to what was said at the time he received the quitclaim deed, Slocum testified as follows: “I had a conversation with Mr. Marks prior to the execution of this deed to me. I found his name on the assessor's records here. At the time I had the conversation with him I thought that he owned all of this property. I thought I was getting the whole property. He said he didn't own anything. He said he had no recollection of owning any land in Kings County and that he didn't believe he did. He did not tell me why he didn't own any property in Kings County. He did not tell me that he was in bankruptcy or that bankruptcy proceedings were then pending. He didn't make it quite as strong as to say he didn't own any property in Kings County. To his recollection he didn't think that he did own––he had owned lots of land in the San Joaquin Valley but he didn't remember owning any in Kings County. He didn't represent to me that he owned any land in Kings County.” Another witness testified that within three or four days after June 10, 1929, Slocum showed him this quitclaim deed and he informed Slocum that Marks had gone into bankruptcy and that the paper was worthless. Early in July the appellant Faust called on Marks with reference to this property and was informed by him that he had conveyed the same to Slocum. On September 4, 1929, Faust secured a quitclaim deed from Slocum, paying him $250 for the same.

It is the contention of the appellants that since a certified copy of the order adjudicating Marks a bankrupt, with a certified copy of the order approving the trustee's bond were not recorded in Kings county until after the recordation of the quitclaim deeds referred to, and since both Slocum and Faust paid a consideration for the respective quitclaim deeds, Slocum was a bona fide purchaser for value for a good consideration and without notice, and that Faust is similarly a bona fide purchaser and is protected by the provisions of the recording acts of this state. While an exhaustive brief has been filed by the appellants, the entire argument therein is based upon the assumption that Slocum and Faust were bona fide purchasers in good faith and without notice, and we are given no assistance upon the important question as to whether these parties were in fact such bona fide purchasers. Apparently, the appellants rely entirely upon the fact that a consideration was paid.

In House v. Ponce, 13 Cal. App. 279, 109 P. 161, 162, the court said:

“Defendant called Gordon as a witness, and he testified that about February, 1906, said Farley came to the witness' house claiming to represent some one else, and wanted to get a deed to the lots; that Farley presented a bargain and sale deed, which witness declined to sign, but he finally, after some conversation, signed a quitclaim deed to Farley; that witness received no consideration for the deed; that witness at the time he made said quitclaim deed to Farley did not own the lots, but had conveyed two of them to W. J. Walsh in May, 1888, two of them to John Robinson in April, 1889, and the other two to Levi Van Fossen in 1893; that witness had disposed of all of said lots and given deeds to them prior to 1895. These deeds, although it does not appear that they were recorded, were good as to all persons save a subsequent purchaser or mortgagee in good faith and for a valuable consideration. Civ. Code, § 1214. The evidence of Gordon is not contradicted, and plainly shows that no title was in him when he conveyed to Farley. There is not a word of evidence even tending to show that plaintiff paid any consideration for the lots, or that he was a bona fide purchaser. The fact that Gordon refused to make any other than a quitclaim deed was notice to Farley, and sufficient to put him upon inquiry. The grantee in said quitclaim deed assumed all risks as to title. He took, and knew he was taking, only such title as was left in Gordon. There being no title in Gordon, nothing was conveyed. There is no explanation as to why the plaintiff procured the quitclaim deed. If he did it for the purpose of acquiring a standing upon which to come into court and attack the defendant's tax title, such purpose does not commend itself to a court of equity. The defendant, being in possession under a deed from the state, regular in form, for which he paid a valuable consideration, and thus enabled the state and county to collect the taxes which had been assessed upon the lots, cannot be disturbed for light or trivial reasons, or by a stranger who has nothing but a quitclaim deed from one who had no title. The law aims to do justice and prevent wrongs. One claiming its affirmative aid to quiet his title must prove such title, and not rely upon a mere piece of paper made without consideration by one who had no title.”

While in the instant case a consideration was paid, title had already passed from Marks by the operation of the bankruptcy laws and he was in no better position to convey a title by deed than he would have been had he previously deeded the property to others, as was the situation in the case just cited. While the evidence in the case before us shows a consideration, it fails to show another important element in constituting a party a bona fide purchaser. The essence of such a position is that the purchaser shall buy in good faith and without notice of anything wrong with the title he is purchasing. The evidence here does not show that Slocum was purchasing in good faith and without notice within the meaning of the rules in question. While ordinarily a quitclaim deed may be sufficient to pass a good title if the parties believe the vendor's title to be good, and act upon that belief without knowledge of anything to the contrary, we think that, under the circumstances here appearing, the quitclaim deed to Slocum was, in itself, notice of its own weakness. The undisputed evidence is that Marks told Slocum at the time that he did not own the land; that he had no recollection of owning any land in Kings county; and that he did not believe that he owned any there. His title had already passed to the trustee in bankruptcy for the benefit of his creditors and the facts show that he was correct both in his belief and in his statement that he owned nothing. This was sufficient to put Slocum upon notice. A proper investigation would have disclosed the situation, he was merely taking a chance, and by taking a quitclaim deed with such notice he obtained only such title as Marks still retained, which was nothing at all. Whether he purposely secured the quitclaim deed for the purpose of defeating the rights of the creditors of this bankrupt or whether he was merely negligent in failing to take the steps that a reasonable man would take in making a purchase in good faith, his position is not one that has a strong equitable appeal.

It is elementary that if Slocum acquired no title under his quitclaim deed from Marks, he had none to convey and Faust could acquire none from him under the later quitclaim deed.

The appellants also contend that the respondent is bound by a judgment in a quiet title action which was entered on January 21, 1930, the action having been brought by one Walker against Marks, and Walker having quitclaimed his interest to Faust. Neither the respondent nor the trustee in bankruptcy were parties to that action, and they are in no way bound by the judgment therein.

For the reasons given the judgment is affirmed.

BARNARD, Presiding Justice.

We concur: MARKS, J.; JENNINGS, J.