U.S. Supreme Court
Lynch v. Murphy, 161 U.S. 247 (1896)
Lynch v. Murphy
Argued December 18-19, 1895
Decided March 2, 1896
161 U.S. 247
Arndt v. Griggs, 134 U. S. 316, affirmed to the point that the duty of determining unsettled questions respecting title to real estate is local in its nature, to be discharged in such mode as may be provided by the state in which the land is situated when such mode does not conflict with some special prohibition of the Constitution or is not against natural justice.
Applying that doctrine to this case, it is held that the decree in the equity cause of Pippert v. English was not void for want of personal service on English and his wife, as the laws relating to the District of Columbia permit service by publication upon absent defendants.
And further, as the evidence shows that Pippert had no knowledge of the attempt by Mrs. English to encumber the land in question by a deed of trust, the recording of the instrument did not give him constructive notice of it, as the formalities required by law to authorize the recording were not complied with.
That deed of trust was inoperative as a legal instrument.
There being no actual notice, and the recording of the defective deed not operating as constructive notice, the alleged equitable lien is wholly inoperative against those holding under the decree below.
The complainant below was Christeina Murphy, who sued chanroblesvirtualawlibrary
in her own right and as executrix and trustee under the will of Peter Pippert, her deceased father. By her bill, complainant sought the cancellation of a deed of trust upon certain land in the City of Washington devised by her father to complainant and to two of the defendants named in the bill or, in the alternative, the reinstatement of a deed of trust for the benefit of said Pippert, which had been cancelled by a judicial decree as hereinafter stated. The deed of trust attacked by the bill purported to have been executed in August, 1874, by Elizabeth English to one Bean, to secure payment of four notes for $1,000 each, payable to the order of James Lynch. It was averred in substance that at the time of the execution of the deed of trust the legal title to the land was in Elizabeth English and Andrew Schwartz, Sr., by virtue of a conveyance from Pippert made July 27, 1874, and the land which it embraced was encumbered by a deed of trust to Pippert given to secure the unpaid purchase money, $10,390.42. It was also alleged that the deed from Pippert to English and Schwartz was annulled by a decree of the Supreme Court of the District of Columbia in a suit instituted by Pippert to cancel his conveyance on the ground of alleged fraud practiced upon him in the transaction. At the time of the institution of said suit, the Bean deed of trust had been placed by Mrs. English on her three-fourths interest in the property bought by herself and Schwartz from Pippert, and it was on the land records of the District of Columbia. Neither Lynch nor his trustee, Bean, were made parties to the suit.
Relief was sought as to the Bean deed of trust upon the ground that it was executed on behalf of Mrs. English by her husband, who had no proper or competent authority in law to execute the same, and it was urged at the trial, among other objections, that the power of attorney under which English assumed to execute the deed of trust was defective, and was not entitled to record, because of the absence therefrom of a certificate of the official character of the officer before whom, in Michigan, Mrs. English acknowledged the instrument. It was further urged in the bill as ground of relief that the notes to Lynch were made without consideration chanroblesvirtualawlibrary
and that the transaction was part and parcel of a scheme by which English attempted to defraud Pippert, as alleged in the suit of Pippert hereinbefore referred to, and that the defendant Jane Lynch, claiming to be the owner of the notes secured by said deed of trust and the heirs at law of Bean, the deceased trustee, were threatening to enforce the deed of trust by advertising the premises for sale thereunder.
The controversy in this Court being confined to the question of the validity of the apparent deed of trust to Bean, numerous allegations contained in the bill are unnecessary to be referred to.
Of the pleadings filed on behalf of the various defendants, only that of Jane Lynch requires notice. In her answer, she set up her ownership of the notes referred to in the Bean deed of trust, claiming that she received them from her husband on the day the notes bore date. She denied any knowledge of the suit to cancel Pippert's conveyance to Mrs. English and Schwartz, and averred that she had no knowledge of the decree in Pippert's suit until very recently, and further averred that her deceased husband parted with full consideration for the notes, and that the transaction was not fraudulent.
While averring that English did have proper and competent authority in law to execute the said deed of trust as the agent of his wife, Mrs. Lynch coupled such averment with the claim that the property purchased from Pippert was in fact paid for by the money of Alexander English, who kept his property in his wife's name so as to be out of the reach of his creditors, and that said English was the real principal, and in giving the deed of trust for the benefit of Lynch he was pledging his own property, though in the name of his wife, for a debt due by him, and for which he received the consideration. We quote the following statements in the answer:
"Defendant further says that she is advised and believes, and therefore charges, that while the said deed of trust is not technically sufficient in law to constitute a valid deed of trust, yet that it was, on the part of said English, a pledge of property of which he was the real and equitable owner, for a just debt which he owed the said James Lynch, and that the
said deed of trust constitutes an equitable mortgage upon the said premises which this defendant has the right to have enforced, and that the said Peter Pippert had notice thereof in his lifetime, and before the filing of the suit by him hereinbefore referred to; that the complainant herein is not a purchaser thereof, but a mere volunteer, having taken the property as a gift, and without paying any value therefor, and with full notice of this defendant's claim, and this defendant says that complainant took the land subject to all the equities of this defendant and all other persons whomsoever. Defendant says that the said notes have never been paid, and that it is true that she threatened to enforce the said trust by a sale of said real estate because of the nonpayment thereof."
After the cause was at issue, a decree was entered by consent of all parties appointing a trustee to make sale and ordering a sale of the property affected by the bill. The following provision is contained therein:
"And whereas the said Jane Lynch, in consideration of the provision hereinafter made, is willing to consent to the decree of sale, now it is further ordered, adjudged, and decreed that said John C. Heald, immediately upon the completion of such sale, shall pay into the registry of this court the sum of eight thousand dollars of the proceeds of said sale, and that the same shall be invested and reinvested under e registry of this court the sum of eight thousand dollars of the proceeds of said sale, and that the same shall be invested and reinvested under e registry of this court the sum of eight thousand dollars of the proceeds of said sale, and that the same shall be invested and reinvested under the direction of the court, and held until the final determination of this cause in the court of last resort, and that said sum of eight thousand dollars, and the notes, securities, or property in which the same shall from time to time be invested, and the increase thereof, as to all parties interested in said real estate, shall stand in the place and stead of said real estate, and that if in this proceeding it shall ultimately be decided that the defendant Jane Lynch had a valid lien upon said real estate at the time the bill in this case was filed, for the sum of four thousand dollars, with interest as aforesaid, or only part thereof, then said sum of eight thousand dollars, and the increase thereof, or so much thereof as shall be necessary, shall be applied for the satisfaction of such lien. "
A sale of the property was had, and the fund representing the Lynch claim was paid into the registry of the court.
After the taking of testimony the cause came on for hearing, and on May 13, 1891, the court at special term entered a decree adjudging the deed of trust to Bean to be null and void, that the fund in the registry of the court belonged to the estate of Peter Pippert, and, under his will, passed to the complainant and the defendants Edwin Marsh and Florence Marsh. On the appeal of Jane Lynch, the general term, on May 31, 1892, affirmed the judgment of the special term.
Thereupon Mrs. Lynch took an appeal to this Court.