1. Where a deed of land shows on its face that the consideration
is yet "to be paid," a second purchaser (that is to say, a
purchaser from the vendee) who has notice of the deed takes the
land is those states (of which Texas is one) where the English
chancery doctrine of a vendor's lien prevails, subject to the
vendor's lien, unless such lien has been in some way waived.
2. In the case of such a deed, it is the duty of the new
purchaser to inquire, and where inquiry is a duty, the party bound
to make inquiry is affected with all the knowledge which he would
have got had he inquired.
3. Though it is true that taking a note with a surety from the
vendee is generally evidence of an intention to rely exclusively
upon the personal security taken, and therefore, presumptively, is
an abandonment or waiver of a lien, yet this raises only a
presumption, and as a presumption only, it may be rebutted by
evidence that such was not the intention of the parties.
4. The testimony of the vendor received to rebut, and being
positive, held sufficient to do so.
5. Where a vendor already has a lien evidenced by a note for the
payment of all and every part of the purchase money so long as it
remains unpaid, the lien for any purchase money afterwards still
unpaid is not lost by the fact of his receiving part payment of the
note before its maturity, taking a new note payable at the same
time and in the same way and place as the original note, and a
destruction of such original one.
6. By the laws of Texas (which in a matter connected with real
estate was respected by this Court in a suit coming from Texas) an
assignment of a note given for the purchase money of real estate
carries the vendor's lien.
On the 4th of March, 1859, B. G. Shields, by instrument of
Page 84 U. S. 2
writing, "bargained and sold to G. M. Hood" (both parties being
of Texas) a tract of land in that state, described, "for the sum of
$27,000, to be paid by the said Hood as follows." Certain drafts
and notes to be given by Hood were then specified, among the notes,
one for $9,000, payable at the Union Bank, New Orleans, April 9,
1862. The deed ended with a covenant that
"on the completion of
the payments before mentioned," Shields would warrant and
defend the premises to Hood, his heirs and assigns, against all
persons lawfully claiming or to claim them. In point of fact, when
the papers came to be executed, the notes were signed not only by
Hood, the purchaser, but also by his son, G. M. Hood, Jr. On the
1st of April, 1862, before the note that became due on the 9th
matured, Hood, Sr., called on Shields and stated to him that he had
some surplus cash with which he desired to pay a part of it off.
Shields accordingly took his money and a new note was executed for
the balance, the old note being given up. The new note, like the
old one had been, was made payable April 9, 1862, and at the Union
Bank, New Orleans. This new note Shields afterwards (in the autumn
of 1862) assigned to one Bartlett.
In May, 1863, Hood sold the land to two persons named Scroggin
and Hanna, and, Bartlett having become bankrupt, his assignee in
bankruptcy, one Cordova, now filed a bill in the court below
against both the Hoods, Scroggin, and Hanna, to enforce the lien.
The bill did not allege that the complainant had exhausted his
remedy at law against Hood, the vendee of the land, who, or whose
estate in point of fact, appeared to be solvent.
The Hoods let a decree pass
pro confesso. Scroggin and
Hanna set up in answer or in argument that all vendor's lien had
been waived by taking Hood, Jr., as a party, who, not being
interested, was a surety on the notes; that even if any lien had
existed under or by virtue of the note of $9,000, such lien was
waived when that note was paid, as in law it was completely when it
was surrendered, the transaction having been not a credit on an old
debt, of so much cash paid, but an acceptance of cash and of a
new
Page 84 U. S. 3
debt, accompanied by an annihilation and extinction of the old
one; that, at any rate, however all this might be as between
Shields and Hood, they, Scroggin and Hanna, were purchasers,
bona fide and without notice of any lien; that further, if
Shields, the vendor, might himself have enforced a lien against the
land had he continued to hold the note and debt, the right of
enforcement was a right personal to him, and that it did not pass
to Bartlett, his assignee, and as little certainly to Cordova,
assignee in a second remove.
Shields, who was examined, thus testified:
"The recital in the instrument executed to G. M. Hood, Sr., on
the 4th of March, 1850, corresponds with the facts, except that the
name of G. M. Hood, Jr., was also signed to the notes. The land was
sold to Mr. Hood, Sr., and his responsibility, coupled with a
vendor's lien, secured by the regular form and terms of the
instrument, was deemed by me a sufficient security. Mr. Hood, Jr.,
accompanied his father to my house, and was represented by his
father to be his agent. I do not remember why it was that Mr. Hood,
Jr.'s name was signed to the notes. The deed or instrument was
prepared, to the best of my recollection, before the notes and in
the absence of Mr. Hood, the notes after the arrival of Mr. Hood
and son. Their joint signatures was probably a suggestion of the
moment, and did not alter or take from the facts recited in the
instrument. Mr. Hood, Sr., did execute the notes to secure the
payment of the amounts, and at the time and for the considerations
mentioned in the deed. The additional signature of Hood, Jr., was
simply that much more -- a gratuity not called for by nor altering
the contract. Mr. Hood, Sr., was represented, by those who knew him
in Eastern Texas, to be a wealthy man. His son was considered
responsible and trustworthy as far as I know. The reason for not
taking a mortgage is shown by the terms of the instrument, by which
the vendor's lien is plainly retained and held. I have no
recollection of who was present when the terms of the instrument
securing the vendor's lien were discussed, if discussed at all.
There never was any question between us on that point, it being
considered, of course, that my obligation of warranty in the
instrument would only be made perfect or complete upon the payment
of the whole amount of the purchase money. "
Page 84 U. S. 4
"The payment of a portion of the note of $9,000 in advance and
taking another note was simply a matter of convenience, and not
intended in any manner or to any extent whatever to impair or
affect the lien retained by the terms of the instrument to secure
the payment of the whole amount of the purchase money. It was
positively and unequivocally so stipulated and agreed between us at
the time of the execution of the said note of $5,015, so stated and
understood, without question, between us."
"The note was traded to Bartlett with the statement from me that
it was secured by a vendor's lien on the land sold to Hood, Sr. I
will further state that I believed at the time that Mr. Bartlett
had special reference to that fact in the transaction, and that he
felt that the note of G. M. Hood, Sr., to secure the remainder of
the last payment for the land, with the right of the vendor's lien
upon said land, was safer for him (Bartlett) than cotton, which he
gave me for it, then liable at any moment to impressment."
"Both Hanna and Scroggin spoke to me sometime since -- perhaps
1868 or 1869 -- in reference to the terms of sale by me to Hood. I
gave them such information as my recollection of the facts
warranted. One of them and perhaps both stated that they had been
informed by Mr. Hood that he had paid the whole amount of the
purchase money, in reply to which I gave them true information as
nearly as I could. At the time, there was more than $9,000
due."
Bartlett was also examined. He said:
"When Shields sold the note to me, he told me distinctly and
positively that it was secured by a lien on the land. This was
perfectly understood between us. I relied on this lien when I
purchased it."
Scroggin and Hanna were also both examined. They testified that
Hood, Sr., was one of the wealthy men in Texas; that they supposed
that the land had been sold to him on his personal responsibility;
that with his own lips he declared to them that every dollar was
paid on the land; that they had never heard of any lien. It
appeared, however, on cross-examination that they had seen the
record of the deed of March 4, 1859, from Shields to Hood, before
purchasing
Page 84 U. S. 5
from Hood, and had had it examined by their professional adviser
for their own "protection."
The court below confirmed the decree so far as the bill was
confessed, but dismissed it as against Scroggin and Hanna. From
that decree Cordova took this appeal.
MR. JUSTICE STRONG delivered the opinion of the Court.
The appellees must be held to have had notice of whatever
equities were revealed in the line of their title. They claim
through a conveyance from Hood, Sr., who had purchased from Shields
in 1859, and the deed from Shields plainly exhibited the fact that
the purchase money remained to be paid. It contained not even a
receipt for the consideration of the sale. In form, it was a deed
of bargain and sale, but there was not enough in it to show that
the use was executed in the vendee. On the contrary, it recites a
consideration "to be paid" in installments at subsequent dates, for
which a draft and notes were given. That the vendor, by such a
deed, had a lien for the unpaid purchase money, as against the
vendee and those holding under him with notice, unless the lien was
waived, is the recognized doctrine of English chancery, and Texas
is one of the states in which the doctrine has been adopted.
[
Footnote 1] It is a general
principle that a vendor of land, though he has made an absolute
conveyance by deed, and though the consideration is in the
instrument expressed to be paid, has an equitable lien for the
unpaid purchase money unless there has been an express or an
implied waiver of it. And this lien will be enforced in equity
against the vendee and all persons holding under him except
bona fide purchasers without notice. [
Footnote 2] With greater reason, it would seem,
should such a lien exist and be enforced when, as in this case, the
deed,
Page 84 U. S. 6
instead of containing a receipt for the purchase money,
expressly states that it remains unpaid.
The important question to be considered, therefore, is whether
the lien has been waived. That there was no express waiver by
Shields at the time when his deed to Hood was made and delivered,
or at any subsequent time, is not only not proved but is plainly
disproved. Shields himself has testified that the lien was never
released by him, and that when the note of his vendee for $5,015
was taken for the unpaid portion of the larger note given at the
time of the sale, it was with the distinct understanding between
him and Hood that the payment then made, and the execution of the
note for the balance, made no difference whatever respecting the
vendor's lien to secure the balance, but "that the land should
continue just as liable to secure payment of said balance as
before."
It remains then to inquire whether there was any implied waiver
of a lien. When the deed was made, the vendor took for the purchase
money promissory notes signed not only by Hood, the vendee, but by
Hood, Jr., his son. Had the notes been signed by the vendee alone,
no implication of an intent to waive a vendor's lien could have
arisen. It is everywhere ruled that where such a lien is recognized
at all, it is not affected by the vendor's taking the bond or bill
single of the vendee, or his negotiable promissory note, or his
check, if not presented or if unpaid, or any instrument involving
merely his personal liability. [
Footnote 3] It is true that taking a note or a bond from
the vendee with a surety has generally been held evidence of an
intention to rely exclusively upon the personal security taken, and
therefore, presumptively, to be an abandonment or waiver of a lien.
But this raises only a presumption, open to rebuttal by evidence
that such was not the intention of the parties. [
Footnote 4] And we
Page 84 U. S. 7
think the evidence in this case clearly shows that neither party
to the deed understood that the vendor intended to take the note of
Hood, Sr., and Hood, Jr., as a substitute for the lien. The only
evidence we have bearing directly upon the subject is in the
testimony of Shields. To some extent, he does undoubtedly confound
his own impressions with what occurred when the notes were given.
But we think it may fairly be deduced from his statements that
there was no intention then to waive the lien, which the law
implied from the terms of the deed. He is unable to state why the
son's name was signed in conjunction with the father's, but he is
positive that the additional signature was simply a gratuity not
called for by the contract nor altering it. He states also there
never was any question between himself and his vendee respecting a
vendor's lien, adding, it being considered, of course, that his
obligation of warranty in the deed would only be made perfect or
complete upon the payment of the whole amount of the purchase
money. And that taking the notes as they were taken was not
intended as a waiver of a vendor's lien, or at least that it was
not understood by the vendee to be such a waiver, is placed beyond
doubt by what took place afterwards, on the 1st of April, 1860.
There the renewed note was given for a part of the original
purchase money, and it "was positively and unequivocally stipulated
and agreed by the vendor and vendee" that the original lien was
retained, that the land should continue liable as before. How could
this be if the lien had been waived? Waiver is a thing of intention
as well as of action, and it is impossible to believe, in view of
this testimony, there was an intention to give up the security of
the land. Were this a bill to enforce the lien against the lands in
the hands of Hood, the purchaser, it would not be permitted to him
to assert that the vendor had, from the first, relied only upon the
personal security taken.
And Scroggin and Hanna, the purchasers from Hood, are in no
better position. They are not
bona fide purchasers without
notice. As we have seen, the lien for the purchase
Page 84 U. S. 8
money was apparent in the line of their title. The deed from
Shields to Hood informed them that the consideration was unpaid. It
imposed upon them the duty of inquiring whether it remained unpaid
when they were about to make their purchase. [
Footnote 5] Wherever inquiry is a duty, the party
bound to make it is affected with knowledge of all which he would
have discovered had he performed the duty. Means of knowledge with
the duty of using them are, in equity, equivalent to knowledge
itself. Had inquiry been made of the vendor, it would easily have
been ascertained that a portion of the purchase money remained
unpaid. Inquiry of Hood, the debtor, if any such inquiry was made,
was an idle ceremony. The deed pointed to the person from whom
purchasers from Hood were bound to seek information.
It has been suggested in the argument on behalf of the appellees
that taking up the original note, and giving another note for an
unpaid balance of the first, may have terminated the lien if any
existed. Undoubtedly no agreement made in 1860, when the new note
was given, created a vendor's lien for its security. But the
original lien was for all the purchase money, and for every part of
it so long as it remained unpaid. It was not merely security for
the notes first given; it was for the debt of which the notes were
evidence. Giving the new note was not payment of the debt, it was
only a change of the evidence, and therefore the fact that it was
given did not affect the lien. In
Mims v. Lockett,
[
Footnote 6] it was held that
if a vendor of land takes a note for the price and subsequently
renews it, adding in the new note a sum of money due him by the
vendee on a different account, his vendor's lien will not be
invalidated thereby.
It has been further argued that even if Shields, the vendor,
might have enforced a lien against the land had he continued to
hold the note, Bartlett, his assignee, cannot. It is contended that
a vendor's lien is a personal right of the vendor himself, not
assignable. And hence that the assignee of a note given for the
purchase money cannot resort in equity
Page 84 U. S. 9
to the land sold. It must be admitted that such is the doctrine
of very many cases, perhaps of those which have been best
considered, though there are many well reasoned judgments to the
contrary. But we think, for the purposes of the present case, the
law, as held by the Supreme Court of Texas, must furnish the rule
of decision. And the decisions of that court appear to be that an
assignment of the notes given for purchase money carries with it
the lien to the assignee. [
Footnote
7]
It has been held that in order to enforce a vendor's lien, the
bill must show that the complainant has exhausted his remedy at law
against the personal estate of the vendee, or must show that he
cannot have an adequate remedy at law. And this bill makes no such
showing. But in Texas, as in some other states, the creditor may
proceed in the first instance to enforce the lien in equity.
[
Footnote 8]
Upon the whole, then, we think the circuit court erred in
dismissing the complainant's bill. He was entitled to a decree.
Decree reversed and the case remitted with instructions to
enter a decree for the complainant against Scroggin and Hanna, the
appellees and defendants below.
[
Footnote 1]
Osborn v. Cummings, 4 Tex. 13;
Neel v.
Prickett, 12
id. 138;
Briscoe v. Bronaugh, 1
id 326.
[
Footnote 2]
Mackreth v. Symmons, 15 Vesey 329.
[
Footnote 3]
See numerous cases collected in note 1, Leading Cases
in Equity, Hare & Wallace 235, under the case of
Mackreth
v. Symmons.
[
Footnote 4]
Campbell v. Baldwin, 2 Humphreys 248, 258;
Marshall
v. Christmas, 3
id. 616;
Mims v. Railroad
Co., 3 Kelley 333;
Griffin v. Blanchar, 17 Cal. 70;
Parker v. Sewell, 24 Tex. 238;
Dibblee v.
Mitchell, 15 Ind. 435.
[
Footnote 5]
McAlpine v. Burnett, 23 Tex. 649.
[
Footnote 6]
23 Ga. 237.
[
Footnote 7]
Moore v. Raymond, 15 Tex. 554;
Watt v. White,
33
id. 425.
[
Footnote 8]
McAlpine v. Burnett, 19 Tex. 497.
