JONES v. INDEPENDENT TITLE CO ET AL (1943)

This is an appeal from a judgment decreeing that plaintiff had a first lien, and Rae L. Sinclair, to whom we will hereafter refer as the defendant, had a second lien, on real property in San Bernardino County.

The property was formerly owned by William C. Simpson, now deceased, who conveyed it to M. H. Collins by a grant deed dated May 5, 1939, and recorded September 9, 1939. Collins conveyed the property to plaintiff by grant deed dated November 6, 1940, and recorded on November 25, 1940.

Defendant claims a lien on the same real property by virtue of a deed of trust securing a promissory note for $1,000 dated December 21, 1936, payable one day after date, signed by W. C. Simpson and Mrs. May Simpson. The deed of trust bore the same date and was recorded on March 15, 1940.

The trial court found that the deed from Simpson to Collins was a mortgage given to secure the repayment of $1,000 which Collins had loaned Simpson; that Collins had no notice or knowledge of the unrecorded deed of trust held by defendant; that the deed from Collins to plaintiff assigned to him the interest Collins acquired under his deed. The evidence supports these findings. The conclusion was drawn from them that the lien created by that deed was prior and superior to the deed of trust held by defendant. There is no finding on the question of Jones giving Collins any consideration for the deed. The evidence shows this transfer to have been a gift without consideration passing for it.

Thus we have presented the question of priority of the two liens created on the same property by a deed which was in effect a mortgage executed to secure a debt, which deed was executed and delivered subsequent to the execution of defendant's security but was recorded prior to the recordation of the deed of trust held by defendant. The considerations paid and the good faith and lack of notice of both Collins and defendant are not questioned. Defendant's deed of trust was recorded prior to the recordation of the deed from Collins to Jones, so Jones had constructive notice of this incumbrance prior to the time he received the deed from Collins.

Collins was a bona fide encumbrancer for value without notice of defendant's claim of security on the same property and his deed was recorded prior to defendant's deed of trust. Between the two, Collins held the prior encumbrance. 25 Cal.Juris. 822, and cases cited. It remains to consider the rights of Jones who took without paying any consideration for the transfer to him and with constructive notice of defendant's deed of trust.

Section 1217 of the Civil Code provides that: “An unrecorded instrument is valid as between the parties thereto and those who have notice thereof.”

Section 1214 of the Civil Code provides in part as follows: “Every conveyance of real property, other than a lease for a term not exceeding one year, is void as against any subsequent purchaser or mortgagee of the same property, or any part thereof, in good faith and for a valuable consideration, whose conveyance is first duly recorded, * * *.”

The case of Beattie v. Crewdson, 124 Cal. 577, 57 P. 463, 464, is decisive of the question presented here. The defendant there purchased the property involved, but lost his deed and it was never recorded. The plaintiff claimed title to the same property through recorded mesne conveyances from the same grantor. Plaintiff claimed to have satisfied a debt of $200 as consideration for the conveyance to him but knew or should have known that defendant was in possession of the property, living in a house he had built upon it prior to the time the plaintiff received his deed. In holding that plaintiff was not an innocent purchaser for value, it was said: “One who purchases real estate is bound to know who is in possession thereof, and is chargeable with notice of the occupant's title (Scheerer v. Cuddy, 85 Cal. 270, 24 P. 713); and if he had notice, actual or constructive, at any moment of time before the payment of the money, he is not a bona fide purchaser (Eversdon v. Mayhew, 65 Cal. 163, 3 P. 641); and the burden is upon such purchaser to show that he had not such notice. (Wilhoit v. Lyons, 98 Cal. 409, 33 P. 325.)” See also, Bell v. Pleasant, 145 Cal. 410, 78 P. 957, 104 Am.St.Rep. 61; Shurtleff v. Kehrer, 163 Cal. 24, 124 P. 724; Ocean Shore R. Co. v. Spring Valley Water Co., 218 Cal. 86, 21 P.2d 588.

As it was not found, and the evidence fails to show, that plaintiff gave any consideration for the conveyance to him, and as he had constructive notice of defendant's deed of trust which was recorded prior to the conveyance by Collins to plaintiff, the judgment cannot be supported.

The judgment is reversed.

MARKS, Justice.

GRIFFIN, Acting P. J., concurs.