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Fair v. Howard.

was nothing wrong in his visit to the juror, and if Showers had nothing to do with it, as may be the facts, they could easily have given, in their affidavits, a full and satisfactory explanation. In cases where misconduct of this kind is charged, we think the counter affidavits should be full and explicit, and so state the particular facts and circumstances that if false, perjury could be assigned. It may be that so far as they relate to the alleged misconduct of Appleton, the counter affidavits were all that was called for by those of the plaintiff, but the alarming extent to which the practice. of tampering with juries has been carried, may justify this intimation of our intention to apply the law in such cases with corresponding stringency. The judgment and order appealed from are reversed, and the cause remanded for a new trial.

JAMES G. FAIR, RESPONDENT, v. HENRY C. HOWARD et als., APPELLANTS.

MORTGAGEE FOR PRE-EXISTENT DEBT WHEN REGARDED AS BONA FIDE PURCHASER FOR VALUE. Where Howard was indebted to Fair, and executed to him a note for the debt, and a mortgage on certain real estate to secure the same: Held, that Fair, as to the land and mortgage, occupied the position of a bona fide purchaser for value; and that his right would prevail as against the equity of Armstrong, for whom Howard held half the land in trust, the declaration of which trust was, however, not put on record until after the mortgage.

POSSESSION OF LAND AS NOTICE OF TRUST IN IT-ESTOPPEL. Where Armstrong being the owner of land, deeded it to Howard by conveyance absolute on its face, but with an understanding that Howard was to hold one-half the land in trust for him; and after recording the conveyance, Armstrong remained in possession of the land: Held, that he was estopped from relying on his continuance in possession as notice of the trust.

APPEAL from the District Court of the First Judicial District, Storey County.

This was one of two actions commenced in 1868, against H. C. Howard, William R. Armstrong and others, to foreclose mortgages. The mortgage in this case was for the sum of ten thousand two hundred and forty-four dollars, upon the undivided half of the "Devil's

Fair v. Howard.

Gate Toll Road," in Storey, Lyon and Ormsby Counties; and in addition to Howard and Armstrong, John Sime, B. F. Hastings, Joseph M. Douglass and Charles L. Low were made defendants. The other case was that of Charles L. Low v. Henry C. Howard and William R. Armstrong, on a mortgage for two notes of four thousand dollars each, on the undivided half of the property in Lyon County, known as the "Devil's Gate Hotel."

The points involved in the case of Low v. Howard and Armstrong were substantially the same as those here involved, and it was decided expressly on the authority of this case-the Court, Whitman, J., holding that the plaintiff "by reason of granting his debtor Howard an extension of time upon his indebtedness, became a bona fide purchaser for value, against whom the equity of Armstrong cannot prevail."

R. S. Mesick and J. Seely, for Appellants.

Williams & Bixler, for Respondent.

By GARBER, J.:

This is an action for the enforcement of the rights secured by a mortgage. The complaint alleges that on the nineteenth day of April, 1867, the defendant Howard made and delivered to the plaintiff his promissory note of that date, and at the same time, to secure its payment, executed a mortgage conveying to the plaintiff certain real estate described; that said mortgage was duly recorded; that defendant Armstrong and others claim an interest in the premises, subsequent to the mortgage lien, etc. Howard and Armstrong answered, setting up that one half of said mortgaged premises, at the time of the execution of the mortgage, belonged to Armstrong, the title being vested in Howard in trust for Armstrong; that plaintiff had notice of said trust, etc. A judgment was rendered, directing a sale of the premises for the payment of said note, and subordinating the claim of Armstrong to the lien of the mortgage. From this judgment and an order overruling a motion for a new trial, this appeal is taken.

The record discloses the following facts: In the year 1860, Howard acquired title to the premises; on the twentieth of August,

Fair v. Howard.

1862, Howard conveyed the same to Armstrong; on the twentyseventh of April, 1863, Armstrong, by deed absolute on its face and duly recorded, conveyed the property to Howard. At the time of the execution of this last-named deed, it was verbally agreed between Howard and Armstrong that one half of the interest so conveyed was to be absolutely the property of Howard, the other half to be held by him in trust for Armstrong, and to be conveyed to Armstrong on request. This trust vested in parol until the fourteenth day of May, 1868, when Howard, by deed in writing, declared the trust to exist, and to have existed since April, 1863. Armstrong was and remained in possession of the premises from a date prior to the deed of April, 1863, to the commencement of this action. Prior to, and at the time of, the execution of the mortgage, Howard was indebted to the plaintiff in the amount specified in the note. Howard requested time for the payment of this indebtedness; and after agreeing upon the rate of interest, the plaintiff consented to give the time and take said note and mortgage. The note was made in the State of California, and was made payable twelve months after date, bearing interest at the rate of one and one-half per cent. per month. It is not pretended that the plaintiff had any notice or knowledge of the existence of the trust set up by Armstrong, other than is to be inferred by law from the fact of Armstrong's possession. According to Sime v. Howard, 4 Nev. 473, Armstrong, as cestui que trust, was the equitable owner of one half of the property at the date of the mortgage.

Upon these facts the counsel for appellant contends in an able and elaborate argument, that the equity of Armstrong, as cestui que trust, was good as against Howard, and equally good against all persons except bona fide purchasers for value; that the plaintiff cannot be considered such a purchaser, because to have a defense against prior equities, one must be a purchaser in the technical sense of the common law, and must have acquired the legal title; that a mortgagee is not a purchaser at common law, and a fortiori not in this State where, it is contended, a mortgage does not pass the legal title; that this mortgage, even if a quasi conveyance, was not taken in good faith within the meaning of either the equitable or statutory rule concerning bona fide purchasers, to the extent

Fair v. Howard.

that it is given on account of an antecedent debt; that to constitute a consideration, valuable in the sense of sufficient, not for the negotiation of bills and notes but for postponing the prior equities of a cestui que trust in trust property, wrongfully mortgaged by the trustee for his own private ends, there must have been a new and specific payment or transfer of money or money's worth; and that the forbearance of a sum of money due and payable cannot be considered as money, etc., so as to make the mortgage of any force against the prior equity; and that even could it so avail, the mortgage would not bind the property for the debt forborne, but only for the price of the forbearance; and that the effect of the mortgage in barring the statutory right of attachment is, if possible, of still less avail; that though there is a conflict of authority as to what is sufficient consideration to impair prior equities in commercial paper, there is none in case of property; that the early New York cases hold most nearly, in cases of paper, to the rule in property cases, and in the former disallow forbearance, or even payment, as consideration; and assuming the equity rule to be that payment or extinguishment of a preëxisting debt is not a valuable consideration, it is argued that mere forbearance of such debt compensated for by the payment of adequate interest cannot be so considered, without abandonment of the whole reasoning by which the equity rule is supported. It is conceded, and is elementary law, that a bona fide purchaser for a valuable consideration, acquiring the legal title or estate from the trustee, will hold against the beneficiary; but, denying that plaintiff is such purchaser, it is claimed that (Howard still holding the legal title) we must apply the equity doctrine, that where the legal title is so outstanding, it is held in trust to satisfy different equities in the order of their creation. (Ex parte Knott, 11 Vesey, Jr.)

It is clear that the plaintiff is a bona fide mortgagee, so far as the question of notice is concerned. By putting the conveyance to Howard on record, Armstrong is estopped from relying on his continuance in possession as notice of the trust; and under such circumstances the plaintiff was not bound to go beyond the declarations of Howard and Armstrong as publicly recorded, and inquire into the actual relations subsisting between them. This is the rule

Fair v. Howard.

laid down in the notes to Le Neve v. LeNeve, 2 Leading Cases in Equity, 166, and any other would be unsafe and subversive of the policy of our registry laws. (Bloomer v. Henderson, 8 Michigan, 405, and cases cited.) Then, was there here a valuable consideration? The question is not whether the consideration is adequate, but whether it is valuable; for if it be such a consideration as will not be deemed fraudulent, or as will make the plaintiff a purchaser within the statute, (27 Eliz.) or is not merely nominal, or the purchase is such a one as would hinder a puisne purchase from overturning it, the consideration must be deemed valuable within the meaning of the rule protecting bona fide purchasers for value against antecedent equities. (1 Daniel's Ch. Pl. & Pr. 777; Bassett v. Nosworthy, 2 Leading Cases in Equity, 51.) Nor need the consideration be money-the giving up a right may suffice. (Hill v. The Bishop of Exeter, 2 Taunton, 82.)

Whether a mortgagee, who takes a mortgage as security for a preëxisting debt is such a purchaser within the statute, (27 Eliz.) has been doubted, and seems to be left an open question by the text writers. (Greenleaf's Cruise, Title 32, Deed, Ch. 28, Sec. 39 [note]; 2 Leading Cases in Equity, 103, et seq.) The analogous question, whether a promissory note indorsed over as collateral security for a preëxisting debt, before maturity and without notice, can be held discharged of the equities between the original parties, has given rise in the American Courts to great conflict of judicial decision, and has elicited opinions exhaustive of the argument. In the early New York cases, and those which have followed them, the reasoning is, that where the note is received for an antecedent debt, either as nominal payment or as a security for payment, without giving any new consideration, the receiver is not a holder for value; that the principle of protecting the bona fide holder of negotiable paper who has paid value for it, or who has relinquished some available security or valuable right on the credit thereof, is derived from the doctrines of the Courts of equity in other cases, where a purchaser has obtained the legal title without notice of the equitable right of a third person to the property; that it has been uniformly held by the Courts of equity, in such cases, that the purchaser who has obtained the legal title as a mere security for or

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