
    George W. Lincoln v. William Purcell et al.
    
    
      1. Lien. By contract, not in the nature of a mortgage or vendor’s lien. An express lien, created by contract and reserved on the face of the conveyance, is not, in all respects, equivalent to a mortgage, because the legal estate passes, by the conveyance, and vests in the purchaser. ÍTeither is it, in all respects, in the nature of the vendor’s lien. The latter, when the legal estate has been conveyed, exists only by implication of law, and is the mere creature of a court of equity. A lien created by contract, and reserved on the face of the conveyance, is regarded as a specific lien, forming an original substantive charge upon the estate thus conveyed, and as affecting all persons who may, subsequently, come into possession of the estate with notice, either actual or constructive, of its existence.
    
      ‘2. Same. Same. Statute of limitations. Ttis being the nature and effect of the lien, the presumption of law is that the purchaser of the land upon which the lien is reserved, holds under and consistent with the lien until the contrary is shown by him. And the statute of limitations will not run until he disclaims the lien, and assumes to hold adversely to it, with the knowledge of the party having said lien.
    3. Same. Same. Same. Adverse possession. Act of 1819, ch. 28, $ 2. The debt of a mortgagee, ox lien of a vendor, or other lien for the payment of money, is not barred, under the act of 1819, ch. 28, $ 2, by the mere lapse of seven years before filing a bill to enforce them. To create the bar, under that section, the possession must be, in legal contemplation, adverse.
    4. Same. Same. Same. Does not run until the money is due. A cause of action must exist for the full period of seven years before suit brought in order to create the bar, and a note payable in stonework to be done at any time called for, cannot be sued on without a previous request to do the work, and the statute of limitations will not begin to run until such request is made.
    5. Same. Release by trustee. If a party hold, as a naked trustee, a lien, for another, a release, by him, of such lien to a person having a knowledge of the character of his claim, is.a nullity.
    0. Same. Same. Liability of the trustee. Estoppel. If a naked trustee execute a release, under seal, of a lien for the payment of money, in which he acknowledges the reception of the money, he will be treated as holding the money in trust, and rendered liable for the same. And his acknowledgement would be an estoppel upon liim, both at law and in equity, to deny the fact of having received the money.
    7. Chancery pleading. Demurrer. Presumption. It is only in cases when it clearly appears from the face of the bill that the equity of complainant is barred, that the bill will be dismissed on demurrer, and every reasonable presumption is to be made in favor of, rather than against, the bill.
    FROM DAVIDSON.
    A demurrer to the bill was sustained by Chancellor FRIERSON, at the May Term, 1858, and the bill dismissed. The complainant appealed.
    Houston, for the complainant.
    The demurrer was sustained and the bill dismissed upon the authority of the case of Ray and others v. Cfoodman, 1 Sneed, 586, in which it is held that “ a possession of seven years by the vendee of land, claiming by virtue of his purchase, as evidenced by the bond for title under which he holds, gives him a right of possession that cannot be disturbed by the vendor by a bill to enforce his lien for unpaid purchase money, which has been due above seven years.” Such lien is held to be barred by the 2d section of the act of 1819.
    1st. Without questioning the correctness of this decision, I insist that it does not apply to this case. That case recognizes the principle that the vendor and vendee are trustees for each other, but holds that such trusts, in cases of ordinary title bonds, are not express but implied, and that express trusts may, certainly, be raised in the contract of the parties, but in the usual bonds, simply for title, the trusts are only implied by law. Now, in the case in hand, -the p'arties were not satisfied with such lien or such trust as might he implied by law, but by express contract, they provide that the notes shall remain a' lien upon the lot until paid, and when paid, Purcell is to hold the lot for himself, his heirs, &c. And I submit whether, as between the parties to the first deed, the statute . of limitations ever operated at all. And I submit whether the transaction was not, in its effect, a mortgage, and if so, whether the statute would run in favor of Purcell, Northrop, or Cheatham, under the facts appearing in the cause.
    2d. Again: I do not understand the case of Ray v. Goodman to go further than to decide that a sale, the execution of a title bond, and the possession of the vendee for seven years, claiming the land under his purchase, forms the bar of the statute. In such case, however, if the¿ vendee were, all the time, acknowledging the existence and validity of the lien, the statute would not form the bar. Eor this effect the possession must be adverse, and this recognition of the lien removes the presumption of adverse holding which is raised by the sale, the title bond, and possession under it. There can be no bar of the statute in any case without an adverse holding. This is distinctly stated in the case of Graham v. Nelson, 5. Hum., 610, which case is recognized in the case of Marr v. Chester, 1 Swan, 416. The Court was construing the 2d section of the act of 1819, and its language is, that “ It cannot bo supposed that the bar was intended to apply to cases where there was no adverse claim to the party, entitled to the land. If the party against whom suit is brought has been holding in subservience to the complainant’s right, and his possession has been consistent therewith, it would be an absurd proposition to assume that such possession was a bar to the action.” See, also, the case of Nolen v. Larmon §• Fenwick, cited in the case of Marr v. Chester. Now, apply these principles to the facts stated in the bill, and it seems to me that the Chancellor, unquestionably, erred in sustaining the demurrer, for it is distinctly charged that both Northrop and Cheatham’s possession was in subservience to complainant’s rights, and that the possession of each was consistent therewith.
    3d. Again: The deed to Purcell was made on the 1st of December, 1849; the deed of the sheriff to Northrop, on the 19th of January, 1850, and his deed to Cheatham was made on the 14th of January, 1851; and this bill was filed on the 11th of January, 1858, which was less than seven years from the time Cheatham acquired the title. Cheatham, then, did not himself hold the lot for seven years before this bill was filed, and unless he can connect his possession with that of Northrop, complainant’s right is not barred. This he cannot do, because Northrop shows on the face of his deed to Cheatham, that he did not hold adversely to the lien for the unpaid purchase money.
    4th. I insist further, that the contract between Northrop and Cheatham, as shown in the deed to the latter, raised, by contract, a trust in favor of complainant, against which the statute of limitations has not run, and would not, even if Cheatham had held it seven years. The language of the Court in the case of Marr v. Chester, is, “If a man receive a conveyance of a legal title of a tract of land, in which conveyance there is a declaration that the bargainee is to he entitled to only three-fourths of the land, 'and that -one-fourth is to he laid off for a third party, -who has an equitable right to it; this is an implied undertaking, by contract, to lay off that one-fourth for the cestui que trust, and to hold the possession, not for himself entirely, but for himself and his co-tenant in equity.”
    Ewing & CoopeR, for the defendants.
   McKinney, J.,

delivered the opinion of the Court.

The complainant’s bill was dismissed on demurrer. The bill seeks to subject a lot in the town of Nashville, to the satisfaction of a balance of unpaid purchase money, by force of an express lien reserved upon the face of the conveyance.

It appears, from the allegations of the bill, that, on the 1st day of December, .1848, .the defendant, Kirk-man, sold and conveyed the lot' in question to the defendant, Purcell, at ■ the price of $1500. At the time of said sale, Kirkman, the vendor, was indebted to the complainant; and it was mutually agreed between Kirk-man, complainant, and Purcell, that the- latter, in part discharge of the purchase money of. the lot, due to Kirkman, should-assume’and become., responsible for. the debt due from Kirkman to complainant. And, in pursuance of this agreement, Purcell executed two notes, one for $525,00, and the other for $825,00, “ payable in stone-work, to be done at any time called for, after the 1st 'of July, 1849.” By this arrangement, and the payment of $650,00 in hand, by Purcell to Kirkman, the purchase money of said lot was fully paid to Kirkman, and the indebtedness of the latter to complainant was extinguished. The deed of conveyance from Kirkman to Purcell, which was executed at the time of the contract, recites the execution of said two notes by Purcell to complainant, in part discharge of the purchase money of the lot; and expressly provides that the sums of money specified in said notes, “ shall be and remain a lien upon said lot or parcel of land, until said sums shall have been fully satisfied, discharged and paid; and the said William Purcell, upon the payment of said notes, is to have and to hold the aforesaid lot or parcel of land,” &c. This deed appears not to have been proved or registered until January, 1852, which was after the sale and conveyance to Cheatham, hereafter to be noticed. '

It further appears from the bill, that, on the 19th of January, 1850, said lot was sold at execution sale, as the property of said Purcell, and was purchased by one Northrop. The sheriff’s deed to Northrop, in describing the lot, refers to it as “ being the same conveyed by John Kirkman to the said William Purcell, by deed, (unregistered,) on the 1st day of December, 1848.” On the 14th of January, 1841, Northrop sold and conveyed said lot to E. R. Cheatham, and in his deed of conveyance-he covenants, amongst other things; that said lot “is unincumbered, with the exception of the balance of the purchase money due from one William Purcell, on the purchase of said lot of ground by said Purcell from John Kirkman, on the 1st day of December, 1848.” And in the covenant of warranty, lie warrants “ against the lawful claim’of all persons, except such as may claim by virtue of the lien of said John Kirkman on said lot of ground, for the unpaid purchase money due from the said William Purcell on his purchase aforesaid from Kirkman.”

The bill exhibits a copy of an instrument executed by John Kirkman to Cheatham, on the 17th of August, 1852, in which the former acknowledges the payment to him, by Cheatham, of the balance of the purchase money due on the two before mentioned notes, executed by Purcell to complainant, and in consideration thereof, he relinquishes to Cheatham all his interest in said lot.

The bill charges that, in fact, Cheatham paid nothing to Kirkman for said release, and denies that Kirkman had any interest in the notes, or in the lien reserved to secure their payment, or that he had any power to release or discharge said lien. It is further charged, in substance, that both Korthrop and Cheatham purchased with full knowledge of the fact that a portion of the purchase money of the lot remained' due to complainant, and, also, with knowledge of the existence of the lien, to secure the payment thereof: and that they, respectively, held said lot in subservience to, and consistently with the right of the complainant, and not adversely thereto; and that in the summer of 1857, Cheatham had promised to pay complainant the remainder of such purchase money.

It is further alleged that the note for $325,00 .still remains unpaid; and complainant states that “ he demanded payment of said note long since, and payment was refused.”

The bill seeks to subject said lot to the satisfaction of the amount of said note, by enforcing tbe lien, which, it is alleged, was reserved for the sole benefit of the complainant. Purcell, Cheatham and Kirkman, are made defendants to the bill. The demurrer to the bill is filed, on behalf alone, of Cheatham.

Taking the allegations of the bill to be true, for the present, we think the Chancellor erred in allowing the demurrer.

The pretended release of Kirkman might be left out of view, as entitled to no consideration in the determination of the main question intended to be raised by the demurrer. Upon the facts charged in the bill, the release is a mere nullity. Kirkman held the lien as a naked trustee for the complainant. No lien could, possibly, have existed in his own favor, for the simple reason that, by the arrangement stated in the bill, his claim for the purchase money of the lot was fully satisfied and extinguished at the time of the sale. And Cheat-ham, as is substantially charged, having knowledge of the facts, cannot avail himself of the release for any purpose. 'How it might be, if Cheatham occupied the footing of a bona fide purchaser without notice, need not be stated. It is clear, however, that Kirkman is a proper party defendant, either for the purpose of having the release annulled, or for the purpose of having a decree against him for the amount of the unpaid purchase money, which, by his deed, he acknowledges the reception of from Cheatham. For, although he had no right to receive the money, yet, having done so, he must be treated as holding it in trust for complainant. And his acknowledgement being under seal would be an estoppel upon him, at law, to deny the fact of having received the money; and he will he alike precluded in equity, for he cannot, in -the latter forum, he heard to allege that he made the release without consideration, with a view to cut off the lien; for this would have been, on his part, a palpable fraud upon the rights of the complainant, which he will not be heard to insist upon, in exoneration of his liability.

But the Chancellor allowed the demurrer, as is stated in the argument, on the ground that the complainant’s equity was barred by the statute of limitations. This conclusion is erroneous, we think, for several reasons.

That it wras competent to the parties, by mutual agreement, to create the lien declared in the deed from Kirkman to Purcell, for the benefit of the complainant, admits of no doubt upon general principles of law. But the exact nature and legal effect of a lien thus created, seems not to be well defined, in any of the books to which we have had access. It certainly' is not, in all respects, equivalent to a mortgage; because the legal estate passes by the conveyance, and vests in the purchaser, notwithstanding the lien reserved in the deed.

And yet it must be regarded as, in some respects, different from, and as possessing greater efficacy than the vendor’s lien, properly' so called. The latter, where the legal estate has been conveyed to the vendee, is the mere creature of a court of equity. It exists only by implication of law; and is in the nature of a trust only, and not a specific lien upon the land conveyed, until a bill has been filed to enforce it. 10 Hum., 371.

But an express lien, created by contract and reserved on the face of the conveyance, though not a mortgage, must at least be regarded as a spécific lien, forming an original substantive charge upon the estate thus conveyed; and as affecting all persons who may subsequently come into possession of the estate with notice, either actual or constructive, of its existence. This must necessarily be so; for even the implied lien of the vendor exists not only against the purchaser and his heirs, but, also, against all persons claiming under him, with notice of it, though they be purchasers for a valuable consideration. But this implied lien does not exist against a bona fide purchaser, without notice; neither will it be allowed to prevail against a creditor who may have acquired a judgment, or execution lien upon the property, before a bill has been filed by the vendor to enforce his lien. 10 Hum., 371, 376. But not so of the lien created by contract, as in the present case. If the conveyance reserving the lien has been duly registered, such lien will be operative against creditors, bona fide purchasers, and all other persons, without regard to actual notice.

It is true, in the present case, that the deed from Kirkman to Purcell, reserving the lien, was not registered until after the sale by Northrop to Cheatham. But this is of no consequence, in this particular case, because the deed from Northrop to Cheatham expressly recognizes the existence of the lien declared in Kirk-man’s deed.

If this view of the nature and effect of the lien in question be correct, it certainly does not create between the parties a relation similar to that of a mortgage, as regards the application of the statute of limitations. The relation of the purchaser is more analogous to that of a trustee, by express contract, who may disclaim the trust; and after such disclaimer, and a knowledge thereof brought home to the cestui que trust, may claim and hold adversely to him. This is putting the case in the most favorable point of view for the defendant, Cheatham. But this will not avail him; as the presumption of law is, that he is holding under and consistently with the trust, until the contrary is affirmatively shown by him. Upon this presumption alone the complainant might have safely rested, in answer to the demurrer, without the aid of the affirmative allegation in the bill, that the defendant had held, and was holding, in subordination to his lien.

It is altogether a mistaken conclusion, that, under the second section of the act of 1819, the complainant’s equity is barred by the mere lapse of seven years, before filing his bill, irrespective . of the character of defendant’s possession. To create a bar, under that section, the possession must be, in legal contemplation, adverse. Such has been the uniform course of decision since the case of Dyche v. Gass, 3 Yer., 397. And the case relied on, (Ray v. Groodman, 1 Sneed, 586,) when carefully examined, will be found to be in accordance with previous adjudications upon the statute. '

But, again: The case of Ray v. Goodman settles, that the purchase money must have been due seven years, before the filing of the bill, to enforce the payment thereof, by a sale of the land.

In other words, a cause of action must have existed for the full period of seven years before suit brought, which might have been asserted at any time within that period, in order to create a bar. This cannob be predicated of the case under consideration, from the face of the bill.

The notes were “payable in stone-work, to be done at any time called for, after the 1st of July, 1849.” We take it to be too clear to require either authority or argument, that no action could have been maintained on these notes, without a previous request to do the work stipulated to be done. Until such demand, or request, made and refused, there was no default, or breach of contract, on the part of the maker of the notes; and, consequently, no right, or cause of action, on the part of the complainant. The principle, that in contracts for the payment of money, on demand, the bringing suit is all the demand required, has no application to a case like the present.

Erom the statement in the bill, that payment was demanded “ long since,” and refused, it cannot be inferred that it was demanded more than seven years before suit. This would be to reverse the rule, that, upon a demurrer, every reasonable presumption is to be made in favor of, rather than against the bill. It is only in cases where, it clearly appears, from the face of the bill, that the complainant’s equity is barred, that the bill will be dismissed upon demurrer, for that cause.

Decree reversed, and cause remanded.  