Austin v. Pulschen

California Supreme Court Mar 18, 1895 No. No. 15,835Published

Before: Vanclief

AI Brief

AI-generated · verify before citing

Holding. The court held that a vendor's lien is superior to a subsequent mortgage lien when the mortgagee had constructive notice of the vendor's interest through the vendor's actual possession of the property and failed to make diligent inquiry.

Issues

Whether a vendor's lien is superior to a subsequent mortgage lien when the mortgagee had notice of the vendor's interest.
Whether actual possession of property by a vendor constitutes constructive notice to a subsequent mortgagee of the vendor's lien.

Disposition. reversed

Quotations verified verbatim against the opinion

“Plaintiff’s possession of the premises at the time he took the mortgage was, under the then existing circumstances, sufficient to put McDonald upon inquiry as to her rights”

“the vendor’s lien of the plaintiff is prior to that of the mortgage to McDonald, and is entitled to preference in payment”

Synopsis

Mortgages—Priority of Lien.—Title to Land in Suit was in B., who agreed to convey to H. on payment of balance of price, and H. agreed to convey to plaintiff on same condition, and gave her possession. Plaintiff agreed to sell to P. for $5,500, and to convey on payment of $3,200, but was to retain possession until full payment. P. applied to defendant for $3,200—$2,700 to pay balance to B., and $300 to pay plaintiff, of whom he informed defendant he was purchasing. Defendant procured an abstract to the land which showed the agreements to convey between B. and H., and H. and plaintiff, and was informed by counsel that plaintiff should convey to P. in order to perfect the latter’s title; and he sent men to inspect the premises, who found plaintiff’s husband in “apparent” possession, cultivating the land as an employee of P. Thereafter, and on the day before the deeds were executed to P. by B. and plaintiff, defendant loaned P. the money as requested, and took a mortgage of the land. Held, that defendant was not a mortgagee without notice of plaintiff’s lien for the unpaid price.

VANCLIEF, C. Action to enforce a vendor’s lien. On March 28, 1891, plaintiff and defendant Pulschen entered into an agreement whereby the former was to sell to the latter a lot of land containing ten acres, situate in the county of Santa Clara, at the price of $5,500, of which price $3,200 was to be paid upon delivery of the deed, and the balance to be secured by two promissory notes of Pulschen—one for $1,000, payable eight months after date; and the other for [989]$1,300, payable eighteen months after date. And, as further security for the payment of these notes, the plaintiff was to retain possession of the lot until they should be paid. At the time of the agreement (March 28, 1891) the legal title to the lot was in Bruce and Kent, who had given a bond for a deed of the same to Charles Henderson, upon payment to them by Henderson of a balance of purchase money. Under these circumstances, Henderson agreed to sell the lot to plaintiff for $5,000, of which she paid $2,500 at the time of the agreement, and Henderson gave her a bond for a deed to be executed upon her payment of the balance, and also gave her possession of the lot. While plaintiff was thus in possession, she agreed to sell the lot to defendant Pulschen, as above stated. On April 1, 1891, three days after his agreement with plaintiff, Pulschen applied to the defendant McDonald for a loan of $3,000, and at the same time told McDonald that he was about to purchase said lot from plaintiff, and that he wanted the loan of $3,000 to pay Bruce and Kent the balance of purchase money due them from Henderson, then amounting to $2,700, and to pay to plaintiff $300. At the time of his application for the loan, Pulschen was indebted to McDonald or to the Pacific Bank in the sum of $1,500, secured only by his promissory note; and he offered to secure both this existing debt and the loan of $3,000 by a mortgage on said lot. Thereupon McDonald procured an abstract of title, upon examination of which his counsel advised him that Pulschen’s title would be made perfect by conveyances to him from Bruce, Kent and the plaintiff, and also from certain other persons who, it is admitted, had no title to or interest in the lot; and such deeds were completely executed on April 17, 1891. One day prior to the delivery of the deed of Bruce, Kent and plaintiff, to wit, on April 16th, Pulschen made his promissory note to McDonald for $4,500, and, to secure payment thereof, executed a mortgage of said lot. It does not expressly appear, however, that Pulschen received the $3,000 loaned to him before April 17th, when the deed of Bruce, Kent and plaintiff was delivered. When Pulschen applied for the loan, McDonald turned him over to Mr. Tomblin, who was then in the employ of the Pacific Bank, and who transacted the business of making the loan and taking the mortgage to secure

Austin v. Pulschen

AI Brief

Synopsis

More from California Supreme Court

Related research

AI Brief