Dunn et al. v. Barnum et al., 51 F. 355

Caldwell, Circuit Judge. The original entry by Poncin was void, and in virtue of that entry neither he nor his grantees acquired any legal or equitable right or title to the land.

But the act of congress provided that, when Poncin paid the entrance money pursuant to the requirements of the act, the first entry should be “allowed and reinstated as of the date of said entry, so that the title to said lands may inure to the benefit of his grantees so far as he may have conveyed the same. ” When Poncin paid the entrance money and received a patent under this act, the title related back to the date of the first entry, and he and his grantees, however remote, were thereby vested with the same right and title to the land which they would have severally possessed had the first entry been valid. “The act applied the doctrine of relation.

It made ho distinction between grantees with warranty and those without it,” and title bonds were held to be within its equity. McCarthy v. Mann, 19 Wall. 20, 2 Dill. 441. The defendants’ contention is that French never conveyed the land to the Elfelts, or that, if such a conveyance was made, it was not recorded when French conveyed to Furber, and that Furber was a purchaser for value without notice, and as such could and did convey a good title to Dunn; and that, if this be not so, Dunn himself was a purchaser from Furbor for value without notice of any infirmity in the title.

We find the fact to be that before the passage of the act of congress French had conveyed the land to the Elicits, and the act, therefore, vested the title in the Elicits and tlieir grantees. It is true, the deed from French to the Elfelts, by reason of a mistake of the recorder in recording it, was mot, at the date of the jxossago of the act of congress, on record, so far as it related to the land here in controversy. But the operation of the act of congress was not restricted to such grantees of Ponein as had recorded their deeds.

The deed had been duly executed, and was as effectual to vest the title in the Elfelts as if it had been duly recorded. It was subsequently duly recorded. There is abundant evidence to show that the last record of the deed expresses truly its contents as it was originally executed. Both records of the deed state that it conveys i 00 acres, but the particular description of the land in the first record only gives GO acres, thus showing an omission of one 40.

The land conveyed by the deed, according to the second record of the same, is the land which French had bound himself by title bond to convey to the Elfelts, and French himself testifies that he did convey the land that he sold to the Elfelts and which was described in his bond. For a discussion of the rules applicable, where there arc two records of the same deed, which differ in a material respect, see St-inmtt v. Doolittle, 50 Fed. Hop. 12.

The deed from French to Furber was made before the deed from French to the Elfelts was accurately recorded, but not before the net of congress had vested the title in the Elfelts and tlieir grantees. It is undoubtedly true that under the operation of the registration iawrs on<' may sell and make good a title to land which somebody else owns. If the seller appears to be the owner of record, the purchaser has a right to assume that the record title is the true title, and when he pays value, and has no notice, actual or constructive, of the previous conveyance of the land by his vendor, he acquires a good title.

Applying the registration laws of this state to the titles acquired by Poncin’s grantees under the act of congress, wo proceed to inquire whether Furber, and Dunn, the defendants’ ancestor, or either of them, 'wore purchasers in good faith and for value without notice. Furber, through his agent Oibbs, had full knowledge of the fact that French had previously conveyed the land to the Elfelts.

The transaction between French and Gibbs, acting for Furbor, which ended in French executing a deed to Furber, was, according to the testimony of French himself, simply and purely a scheme to defraud the Elfelts and tlieir grantees out of this laud. The testimony of French on this point is full and conclusive. But, independently of French’s testimony, the bad faith of the transaction is apparent upon the face of the deed when the value of the property is considered.

The consideration expressed in the deed is $100, and at the time the deed was executed the land was worth $30,000, with a prospect of a rapid increase in value, and it is now worth $1,000,000 or more.

However it may have been in past ages, it is certain that in this age, when capital is so abundant and dealers in land so numerous, and eager to purchase wherever the investment gives promise of a profit, no man can openly acquire in the market, at private sale, a good and unimpeachable title to $30,000 worth of land for $100 without exciting the gravest suspicions as to his good faith and the honesty of the transaction. It would seem that one could not purchase land worth $30,000 for $100 without a well-grounded suspicion either that the seller was insane or that his title was bad.

In the judgment of all mankind—and there is no surer guide to the right than the universal consensus of opinion among men—such a transaction, unexplained, implies a bad title or bad faith. The instant such a conveyance is set up as evidence of a purchase in good faith and for value of a sound title, the inference is irresistible that it was procured by fraud or for a fraudulent purpose.

Such a conveyance passes the legal title, and may be good between the parties as a gift, or as a conveyance to remove a cloud from the title, or as a sale of a confessedly doubtful and disputed title, and for such like purposes; but when it is set up and relied on under the registration laws of the state as a means of taking lands from the real owner, because, and only because, his deed was not recorded, it will not be accepted as sufficient evidence that the vendee paid a valuable consideration and purchased without notice, either actual or constructive, or a well-grounded suspicion that his vendor had no title.

A valuable consideration, actually paid, is an essential requisite. In the sense of this rule, as applied to this class'of cases, the consideration expressed in the deed to Furber is not a valuable one. The same sum of money is,not equally a valuable consideration in all cases. Whether it is so or not depends on the relation it bears to the value of the property claimed to have been purchased with it.

When the consideration is infinitesimal, merely nominal, compared to the value of the property, it will not be accepted as a valuable consideration by a court of equity-, as against one claiming under a prior unrecorded deed. The enormous discrepancy between the consideration expressed in this deed and the value of the land compels the conclusion that the grantee know, or, what is the same thing in legal effect, had good reason to believe, there was a fatal infirmity in the title he was acquiring, and so was not a purchaser in good faith.

At that time numerous satisfactory sources of information were open to any one desirous of learning the facts about the title to this land. One put upon inquiry and seeking the truth could not have failed to learn the facts. An oiler to sell land worth $30,000 for $100 was enough to arouse suspicion and excite inquiry in the most lethargic mind, and if inquiry was not made and the facts not learned it was because the purchaser deliberately and purposely abstained from doing so, to avoid the actual knowledge of facts he with good reason believed to exist, and this is the legal equivalent of actual notice. Hume v.

Franzen, (Sup. Ct. Iowa, 1887,) 34 N. W. Rep. 490; Knapp v. Bailey, (Sup. Jud. Ct. Me. 1887,) 9 Atl. Rep. 122; Gaines v. Saunders, (Sup. Ct. Ark. 1888,) 7 S. W. Rep. 301; Hoppin v. Doty, 25 Wis. 573. The deed from Furber to Dunn is infected with all the infirmities of that from French to Furber, and one additional fatal vico of its own. The land conveyed by this deed was worth at the date of the conveyance $50,000, and the consideration expressed in the deed is $150, and even this sum is not shown to have been paid, by any competent evidence.

The effect of this mere peppercorn consideration compared to the value of the land has been considered in discussing the deed from French to Furber, and needs no further consideration. But the deed from French to Furber was one of bargain and sale, while the deed from Furber to Dunn is a mere deed of quitclaim. This quitclaim to Dunn was executed in 185(5.

It was then the settled law in this state that one claiming title by a quitclaim deed could not be regarded as a iionajide purchaser without notice ; that a deed of that character passed tin: title as the grantor held it, and that the grantee took only what the grantor could lawfully convey. Martin v. Brown, 4 Minn. 292, (Gil. 201;) Hope v. Stone, 10 Minn. 141, (Gil. 114;) Everest v. Ferris, 16 Minn. 26, (Gil. 14;) Marshall v. Roberts, 18 Minn. 405, (Gil. 365.) These decisions are obligatory on this court in this case, and they put an end to the defendants’ claim under the Dunn deed.

The doctrine of the Minnesota supreme court in the cases cited is in harmony with the general, and almost uniform, doctrine of the cases on this subject. McCarthy v. Mann, 19 Wall. 20; Prentice v. Stearns, 113 U. S. 435, 5 Sup. Ct. Rep. 547; Oliver v. Piatt. 3 How. 405; Gest v. Packwood, 34 Fed. Rep. 369; McClung v. Steen, 32 Fed. Rep. 374; May v. Le Claire, 11 Wall. 217; Griswold v. Bragg, 6 Fed. Rep. 342; Dickerson v. Colgrove, 100 U. S. 578; Baker v. Humphrey, 101 U. S. 499; Hastings v. Nissen, 31 Fed. Rep. 597; Bragg v. Paulk, 40 Me. 516; Nash v. Bean, 74 Me. 344); Vattier v. Hinde, 7 Pet. 269; Watson v.

Phelps, 40 Iowa, 482; Johnson v. Williams. 37 Kan. 179, 14 Rac. Rep. 537. Idie rule as to the effect of a, quitclaim deed was changed in Minnesota by statute in 1875, (Strong v. Lynn, 38 Minn. 315, 37 N. W. Rep. 448,) but the act was not retroactive, and it is not claimed that it had any effect on the rights of the complainants and their grantors, who acquired their title and whose deeds were on record long before the act was passed. See Gaston v. Merriam, 33 Minn. 271, 22 N. W. Rep. 614.

In Arkansas one holding under a quitclaim deed is not precluded from showing that he paid lull value, and is in fact a purchaser in good faith. McDonald v. Behling, 145 U. S. 492, 12 Sup. Ct. Rep. 892. This case rested on special grounds. There was good faith in fact, and the odious feature of a nominal consideration was absent, the purchaser having paid full value for the property in cash.

But in that state it is held that where “a person bargains for and takes a more quitclaim deed, or deed without warranty, it is a circumstance, if unexplained, to show that he liad notice of imperfections in the vendor’s title, and only purchased such interest as the vendía- might have in the property.” Bagley v. Fletcher, 44 Ark. 153, 160; Miller v. Fraley, 23 Ark. 735, 740. In Gaines v. Saunders, 50 Ark. 322, 7 S. W.

Rep. 301, Judge Battle, speaking for the court, said: “The evidence shows that the lands In controversy cost about six thousand dollars, and that there was loaned on them as security two thousand two hundred and twenty dollars. The deed executed by Whittaker to Mrs. Saunders was a quitclaim deed and was recorded, and it states that the consideration received for the lands was five dollars. Was not this fact sufficient to put any prudent man on inquiry? Is it possible that any sane man, having good title to land worth two thousand or six thousand dollars, would sell it for five dollars?

The question suggests its own answer. Add to this the fact than the conveyance executed was a quitclaim deed, and the conclusion that Mrs. Saunders did not acquire a good and valid title, in the absence of an explanation, would be irresistible. It was at least sufficient to have put appellants on inquiry, which, if they prosecuted with ordinary diligence, would doubtless have led to actual notice of the facts as shown by the evidence in this case. But they prosecuted no inquiry, and it follows that they are not bonafide purchasers without notice. ” Furber having no title, his quitclaim to Dunn passed none.

As the defendants never had any title to lose by laches, it is unnecessary to° consider that question. The decree of the circuit court is affirmed.