
    Stansell v. Roberts, Jennings, and others.
    The lien of a second mortgage first recorded is preferred.
    Notice of a prior unrecorded mortgage will not, under the Ohio statute, postpone the second mortgagee.
    Nor does it make any difference that the first mortgage was given to secure money borrowed to pay for the land.
    A third person advancing money to enable a purchaser to buy, can not claim a vendor’s lien.
    In chancery, from Highland county.
    This is a bill brought for tho foreclosure and sale of mortgaged tenements, against Roberts, the mortgagor, and Jennings, another mortgagee, claiming a preferable lien.
    *The pleadings and proof show that Roborts, on April 17, 1841, mortgaged the premises to Jennings, whose mortgage was not recorded until July 13, 1842. That on July 4, 1842, Roberts mortgaged the same premises to Stansell, who knew of the existence of the mortgage to Jennings, and who procured his mortgage to be recorded on July 5,1842.
    
      A. Brown, for complainant:
    • The complainant claims the first lien, because his mortgage is first recorded, and there is no fraud shown against him in act, word, or deed.
    Mortgages take effect from the time the same are delivered to the recorder. Swan’s Stat. 266, 267, and the declaratory act, Ib. 268; McGee v. Beaty, 8 Ohio, 396; Doe, ex dem. Sturges, v. Bank of Cleveland, 2 McLean, 341; 5 L. J. 207, 208.
    The object, no doubt, of the legislature was to make the fore going statutes certain and positive. The former laws provided for cases where there was notice, but these do not. The delivery to the recorder is as certainly required before a mortgage takes effect as the execution or acknowledgment of the mortgage. One clause is equally as binding as the other.
    A mortgage, when it is recorded, becomes a lien on real estate, and not before; but one that is not recorded never takes effect.
    A mortgage executed under the statute of Ohio, of 1820, was a lien from the time it was executed, without recording. Notice of such a mortgage was notico of a lien of some vested right; but a mortgage executed under the law now in force, under which this case comes, is not a legal mortgage until it is recorded. The recording is a part of the execution of such mortgage; it is placed upon record before it has any legal effect. Before that, it is only part executed.
    *Thero can be no conflict of rights between parties before their mortgages are recorded. Both stand on equal ground, neither having acquired any right or lien. Then he who is industrious and obtains a lien has the better right. The mortgages referred to in the former registry acts are duly executed, and were liens, and therefore have no analogy to an unregistered mortgage under the present law, which is inoperative, and perhaps not even a ground of action, not having taken effect.
    The complainant, in this case, held the note on file before he took his mortgage, and took his mortgage to secure a just claim, and had it recorded and secured a lien.
    A judgment entered on the same day would, it is presumed, have taken a prior lien to defendant’s unregistered mortgage. A court of chancery would not interfere and give effect to such a mortgage, unless some good reason is shown why defendant has not complied with the law by having his mortgage recorded. The defendant in this ease was doing nothing to acquire a lien.
    The object of the legislature was to compel persons to have their mortgages recorded, and for that purpose provided that they should not take effect until recorded; and for the purpose of rendering such cases more certain, the clause in the law of 1820 (with regard to notice) was left out. This was done for the safety of men of business, so that they might see all the liens that were on real estate by examining the records, and that the sales of real estate should not be injured by reports of claims not upon record, and to guard against secret claims, held in reserve to keep up the credit of persons in failing circumstances. The former law, by its provisions, opened the way to much greater frauds than the law now in force. A construction should never be given to the law that would bring back those evils that the legislature have shut out by a change of the law. The law now in force points out the manner in which liens shall be acquired on real estate. Then it is not a fraud for a person to pursue his remedy to secure his claim, in the manner pointed out by law, as the complainant 'thas done in this ease. The acts of the complainant were •open, and his mortgage placed on the county record in accordance with the law. The statute provides that the first one recorded shall have the first lien. This language is unconditional, and, perhaps, as strong as the legislature could employ in declaring the time and manner of giving effect to mortgages. The legislature could never go further. The complainant here, then, has the prior lien ; his mortgage is first upon record, and takes date from the date of the record; this he has under the express provisions of the statute. It is very evident the legislature intended to change the law, and they have done it in express terms. , If the construction contended for by the defendant be given, there would be no difference, in effect, between the law of 1820 and the law now in force; but the construction contended for by the complainant is not only in accordance with the express provisions of the statute now in force, which governs this ease, but with the obvious intention of the legislature.
    Robert G-. Corwin, for defendants:
    There appears to be no reported decision, under this section of the statute, of the point raised in this ease. The courts, however, have Uniformly decided, upon the circuit, that, if the junior mortgagee, at or before the time of taking his mortgage, had actúa] notice of the existence of a prior unrecorded mortgage, his lien should be postponed to that of his senior mortgagee; and such, no doubt, would have been the decision of the court in this case, had it not been for a decision made by the circuit court of tho United States, in the case of Doe, ex dem. Sturges, v. Bank of Cleveland, 2 McLean, 341.
    This court can not regard this decision of tho circuit court as authority, any further than the dictum of that learned tribunal commands its respect. In giving a construction, then, to this section of our statute, the court must resort to the usual and well-established rule for construing all statute law, and will look to the old law, the mischief, and the remedy.
    *The recording of a mortgage or deed has been held to be but a constructive notice to subsequent mortgagees and purchasers, 1 Johns. Oh. 298; and is it possible that the legislature intended to provide that no other than constructive notice should be of any avail? Not even actual personal notice?
    If it be unsafe to look to tho words alone — and wo can find nothing in either the context or the subject matter to aid us in coming to a conclusion — we are left to look at the effects and consequences, the spirit and reason of the law alono. In applying this test, the first and most important inquiry will be as to what was the object of legislatures in the passage of registry acts. That object evidently was to prevent frauds being practiced upon subsequent purchasers and incumbrancers, by requiring notice to bo given of tho prior conveyance or incumbrance; and, in this case, the notice was more full and complete by far, than if Jennings’ mortgage had been put upon record. In the case of Day v. Dunham, 2 Johns. Ch. 182, it is said that, “ the notice that is to break in upon tho registry acts, must be such as will, with the attending circumstances, affect the party with fraud,” etc.; and in 1 Strange, page 664, it is said that, “ when a man purchases with notice of prior incumbrances, he purchases with an ill conscience, and, in a court of equity, his purchase shall never be established.” In 18 Johns. 554, 555, it is said that, “When the proof of notice is clear and certain, it is, per se, evidence of fraud in him who attempts to defeat a prior incumbrancer, by sotting up a subsequent deed.” Tho same doctrine is laid down with great emphasis, by Lord Hardwicke, in the case of Le Neve v. Le Neve, 3 Atk. 646.
    
      In 4 Kent’s Com. 168, after the learned commentator has given a concise synopsis of the provisions of the statute of New York, by which it will be seen that its provisions are very nearly the same with ours, he remarks: “It may be said, generally, that this is the substance of the statute law on the subject, in every state of the Union ; but in some of them the wording is still more severely enforced, and deeds are declared *void, at least as to all third persons, unless recorded.” And on page 171, same volume, he says, “the doctrine of notice, and its operation in favor of the prior unregistered deed or mortgage, equally applies, however, as I apprehend, throughout the United States, and it everywhere turns upon a question of fraud, and on the evidence requisite to infer it.” In support of this position, the following authorities, embracing decisions from many of the states, aro cited: 4 Mass. 637; 3 Pick. 149; 8 Greenl. 94; 2 Dana, 23; 6 Vt. 411; 2 Bibb, 420; 2 Rand. 93; 9 Johns. 164; 10 Johns. 457; 13 Serg. & Rawle, 167; 2 Har. & Gill, 415; 5 Mason, 159; 1 Brock. 317; 5 Leigh, 520; 18 Mart. Lou. 733; 9 Lou. 71; in 4 Kent’s Com., from page 167 to 174, both inclusive, the whole doctrine is discussed and conclusively settled.
    The statute of New York provides that all mortgages shall be recorded in the city or county where the lands lie; and in case of several mortgages of the same premises, or any part thereof, the mortgage or mortgages which shall be first registered, as aforesaid, shall have preference in all courts of law and equity, according to the times of the registering of such mortgages respectively, provided the mortgage or mortgages .so to be preferred, be made bona fide., and upon good and valuable consideration.” 1 Revised Statutes of Now York, 373. Under this statute, it has been uniformly decided, that notice of a prior unregistered mortgage is sufficient to postpono the subsequent mortgage to the prior one. In addition to the ease of Day v. Dunham, 2 Johns. Ch. 182, already referred to, I would call the attention of the court to the case of James v. May, 2 Cow. 246, and the case of Jackson v. Valkenburgh, 8 Cow. 260; also, to Jackson v. Sharp. 9 Johns. 164; Jackson v. Bengott, 10 Johns. 457, and the case above referred to in 18 Johns. 554.
    The statute of Pennsylvania is even more rigid in its terms than ours; it provides that all mortgages, etc., “shall* have priority according to the date of recording the same, without regard to the timo of making or executing such deed,” and that no mortgago shall be a lien, until such mortgage is recorded. *7 Penn. Laws, 303. And yet it has been decided in one case, at least, that has come to my notice, and doubtless in a number of cases, that, under this statute, the doctrine of notice is entitled to its full force. Muse v. Letterman, 13 Serg. & Rawle, 167. I would also refer to the statute of Connecticut regulating the registry of mortgages, Connecticut Statutes, 390, 391, the provisions of which are very similar to those of Pennsylvania, and to a decision under this statute, in which it is remarked by the court, incidentally, that the doctrino of notice always obtained under that statute, Mix v. Hotchkiss, 14 Conn. 46; the remark being made in the closing paragraphs of the report. The statutes of Delaware, North Caro ■ lina, South Carolina, Yirginia, Tennessee, and Indiana are all equally rigid in their terms with our own ; and under some of them, at least, and no doubt under all of them, the doctrine of notice has always obtained.
    But, as between the complainant and defendant Jennings, there is another and still stronger view that I will present. In almost all the cases cited, and in many others, it has been uniformly held, that, where a subsequent incumbrancer, with notice, seeks to obtain a priority over his prior incumbrancer, he is thereby affected with fraud — such fraud as courts of equity, at least, will not overlook.. Such has been the doctrine in England, under the statute of 7 Anne, ch. 20, the terms of which, if literally construed, would be equally rigid with ours, as the court will perceive, bjr a reference to the cases cited above under that act; and such has been the uniform decision of all the courts in this country. This court is now called upon to give such a construction to our statute as will enable this complainant to consummate an act which has been declared fraudulent in all civilized states, and in all times.
    But if this court are disposed to give a literal construction to our statute, and to sustain the decision of the circuit court, I would then call upon them to take another view of this case, which, it seems to me, is conclusive as to the rights of these parties.
    *It appears that the money loaned by Jennings to Roberts was paid over to the vendor of Roberts; that it was borrowed for that purpefee, and was so appropriated. I shall insist, then, that Jennings’ lien, being to secure the purchase money, is the same in equity with the,vendor’s lien. Jennings advanced this money, through Eoberts, to the vendor, and it matters not whether he or the vendor holds a lien for that amount. If this money had not been so advanced by Jennings, the vendor would have still retained his lien upon the premises for it; and will a court of equity go farther to protect the vendor than him who steps into his shoes and advances the purchase money?
    In the case of Clark v. Morrison, 14 Mass. 351, it was held that the lien of a third person, who advanced'the purchase money and paid for the premises, was the same with the vendor’s lien, for the purpose of barring the widow of the purchaser of her dower in the lands. And again, in the case of Jackson v. Austin, 15 Johns 477, the court go the whole length in saying that the lien of a third person, who advanced the purchase money, shall have the same priority over other incumbrances that the lien of the vendor would have, and, in fact, that such third person is substituted to all the rights that the vendor could have. It is a well-established principle, that, where a person purchases lands with the funds of a third person, the lands shall be held by him for the use of such third person, unless it appears from the transaction, or the facts or circumstances connected with it, that such was not the intention of the parties at the time such advancement and payment were made. But such was the intention of the parties in this case, as is shown by their efforts to make this land liable for the money advanced by Jennings.
   Lane, C. J.

This case presents the naked question, whether the lien of a first mortgage is preferable to the lien of a second mortgage first registered, if the second mortgagee had notice of the first, when his was executed.

*If the solution of this depended upon general chancery principles, the first would hold, by the application of the doctrine of earlier equities.

But our statute relating to deeds, Swan’s Stat. 266, controls the liens arising from the registration of the different kinds of deeds. Section 8 provides that all deeds except mortgages, not recorded within six months from'execution, shall lose their preferences, except against later purchasers with notice; but section 7 relates to mortgages, gives them effect “from the time of record only,” without introducing the exceptions of notice contained in the other section. The expression of the consequences of notice in one class of deeds, and the omission of it as to the other, is a plain indication that the legislature did not mean to give the protection arising froni it, except to the class of deeds to which it is expressly attached.

It is urged that a second purchaser or mortgagee, having notice of an earlier conveyance, commits a fraud by attempting to set up his own claim at the expense of the other. We do not see the-justice of the doctrine between mortgagees. Both acquire equities against the mortgagor, equally deserving protection; and where the law gives priority to the earlier registry, he holds the strongest right.

Neither can the benefit of the lien for the purchase money be claimed by Jennings.- He loaned the money to Roberts to make the first payment on the land. The purchase money is what •passes between vendor and purchaser, and the lien is the right of the vendor to look to the thing sold, for the price for which it was sold. But money advanced by a third person', to enable the purchaser to buy, is no part of this transaction; nor is he who advances privy to the sale. Nor can it be construed into a resulting trust; that, exists where land is purchased with the money of another. But this purchase was made by Roberts with his own money, borrowed from Jennings, and for which the parties looked to no other security than the mortgage, whose lien the mortgagee lost by his own neglect. Decree for complainant.  