DeLany v. Knapp

California Supreme Court Jan 30, 1896 No. L. A. No. 1Published

Before: Henshaw

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Holding. A bona fide purchaser at an execution sale is protected against latent equities, such as a secret fraudulent trust, that contradict the public record of title. Consequently, a party who holds out property as having been divested of homestead exemptions through recorded deeds is estopped from asserting a secret agreement to the contrary against an innocent purchaser.

Issues

Whether a bona fide purchaser at an execution sale is protected against latent equities of which they had no notice.
Whether a party is estopped from asserting a secret fraudulent trust to defeat the title of an innocent purchaser who relied on the public record.

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“She is protected against latent equities of which she had no notice.”

“Neil cannot,, nor can those claiming under him, defeat the title thus obtained by proof of any such “ latent equity.””

“The admission of the evidence of Mrs. Treanor was thus error for which the order denying a new trial must be reversed and the cause remanded.”

Synopsis

Homestead upon Public Lands — Transfer by Patentee—Reconveyance—Divestiture of Exemption.—Although the title acquired by patent from the government of the United States by a homestead claimant is not subject to execution for any debt contracted prior to the issuance of the patent, so long as the title remains vested in the patentee, yet, where the patentee conveys all of his interest in the property, and subsequently acquires title by deed of grant from the transferee, he takes it divested of its homestead character and exemption, which do not revive upon his repurchase.

Id. —Conveyance without Consideration — Secret Trust—Protection of Bona Fide Purchaser—Execution Creditor of Homestead Claimant.—The title of an execution creditor who has made a bona fide purchase for value under execution sale against- the original homestead claimant, upon a levy made after the transfer of the property by such homestead claimant, and its reconveyance to him, is protected as against any secret trust of which he had no notice, arising from the fact that the conveyance was made by the homestead claimant without consideration to protect the title against his creditors; aud the fact that the execution creditor could not complain of the transfer, will not defeat the title so acquired by him in good faith without notice of any latent equity.

Id.—Riqhts of Subsequent Purchasers—Incompetent Proof of Latent Equity.—Subsequent purchasers from the homestead claimant after the rights of the bona fide purchaser at execution sale had accrued, occupy no better position than would the homestead claimant himself; and neither he, nor those claiming under him, can defeat the title thus obtained by proof of a so-called “latent equity ” in favor of the homestead claimant; and evidence of such equity is incompetent.

Henshaw, J. Appeals from the judgment and from the order denying a new trial. The action was to quiet title to one hundred and sixty acres of land. The facts of the case are as follow:

One Neil, from whom both plaintiff and defendants deraign title, entered the land in controversy under the United States homestead laws, and thereafter, pursuant to the statute, commuted and paid for the land, receiving a patent therefor, which, by way of preamble and recital, declared that, “ Whereas, George Neil, of San Diego county, California, has deposited in the general land-office of the United States a certificate of the register of the land-office at Los Angeles, California, whereby it appears that full payment has been made by the said George Neil, according to the provisions of the act of [168]Congress of the 24th of April, 1820, entitled ‘An act making further provision for the sale of the public lands/ and the acts supplemental thereto, for” the land (describing it) “which said tract has been purchased by the said George Neil,” etc.

Upon March 18, 1893, Neil, by deed of grant duly recorded, conveyed the land to Mrs. A. L. Treanor. Upon the fifth day of May following, Mrs. Treanor, by like deed of grant, also duly recorded, reconveyed the same property to Neil. Upon May 10th, five days after, a deficiency judgment was docketed against Neil, and in favor of this plaintiff. The land in controversy was then subjected to levy, and, on the fifteenth day of June, 1893, was sold at public auction, and purchased by this plaintiff. Thereafter, upon the twenty-third day of November, 1893, Neil executed his deed of grant to the same land to one Pauly, to whose title these defendants afterward succeeded.

For the reasons hereafter given we consider it unnecessary to pass upon the question whether, by his commutation, the character of the title Neil received from the government was that inuring under a homestead, or that attaching to a pre-emption patent. For the purposes of this consideration, it will be assumed (though not decided) that Neil took the land as a government homestead.

So taking, the land was not liable for any debt of Neil contracted prior to the issuance of the patent. (Rev. Stats. 1878, sec. 2296.) The deficiency judgment of plaintiff against Neil was for such a pre-existing debt.

Neil’s deed to Mrs. Treanor was, upon the face of the recorded instrument, a conveyance of all his interest in the property, and, when he subsequently acquired title from her by deed of grant, he took the land divested of its homestead exemptions. The patentee sells his land. It is protected in the hands of the purchaser from any debt of the grantor which could not have been enforced against it while the title remained in him; and this is

DeLany v. Knapp

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