
    Dow et al. v. The Union National Bank et al.
    
      Failure to file deed for record — Does not render deed void — As to subsequent creditors of grantor, when — Section 8¿43, General Code.
    
    Section 8543, General Code, provides the only consequences to follow a failure to file a deed for record, and such failure, unaccompanied by fraudulent representations or conduct by the grantee does not render the deed void as to subsequent creditors of the grantor who do not become purchasers.
    (No. 12662
    Decided November 26, 1912.)
    Error to the Circuit Court of Franklin county.
    The bank brought suit, February 1, 1909, against the plaintiffs in error, who are husband and wife, to set aside a deed of described real estate from the former to the latter and to subject the same to the satisfaction of a judgment which it had recovered against him in June, 1907, on a note executed by him to it February 18, 1907, as a renewal of a balance due on three notes which he had executed to it in August, September and October, 1906. The bank alleged that at the time of the creation of said indebtedness to it Edward W. Dow was the owner in fee simple of the real estate which it sought to subject, but that thereafter, by an alleged deed dated October 23, 1901, he attempted to convey the same to his wife for the colorable consideration of two thousand dollars, his deed executed for that purpose being filed for record January 16, 1907, and that said deed was wholly without consideration and was executed for the purpose of defrauding the bank as his creditor and to place his property beyond the reach of his creditors, he being, as was alleged, insolvent, all of which was known to the parties to the deed. The husband and wife filed separate answers admitting the recovery of the judgment and the amount alleged to be due the bank thereon and that the deed executed to her by her husband October 23, 1901, was not then filed for record because she did not think it necessary, and further alleged that the deed was executed to her upon a valuable consideration paid by her to her husband and that at the time of its execution her husband was not indebted to the bank or to any other person to her knowledge, and that from the date of the deed she was in possession of the premises. The husband’s answer denied all allegations of fraud. On the trial of these issues the judgment of the court of common pleas was in favor of the defendant. On appeal the circuit court made a special finding of the facts upon which it rendered judgment in favor of the plaintiff. A condensed statement of the facts admitted and found is as follows: At the time of the execution of the deed, which was at the time of its date in 1901, Mrs. Dow paid to her husband and promised to pay a valuable consideration for the lot which, with the assumption of the mortgage which is now held by the defendant, Joseph A. Hill, was the full value of the premises. Out of moneys which she so paid to him, on April 8, 1903, he paid to the bank his entire indebtedness to it which had accrued prior to that date. Mrs. Dow’s deed was withheld from record not for any fraudulent purpose, but because until she was advised by counsel she did not appreciate the necessity of having it filed for record. After April 8, 1903, Dow contracted a further indebtedness to the bank, in renewal of which he executed the note which was the basis of the judgment which is admitted to have been recovered by it against him. To obtain such credit he made a financial statement to the bank in which he represented himself to be the owner of the premises in controversy, but Mrs. Dow was entirely without knowledge that such representation was made. Upon these facts the circuit court rendered judgment in favor of the bank.
    
      
      Mr. M. E. Thrailkill, for plaintiffs in error.
    The evidence shows that on October 23, 1901, Edward W. Dow was perfectly solvent. Had he even given this house to his wife, it would not have been fraudulent if he kept sufficient means to pay all his debts. Hetrick v. Gregg et al., 8 N. P, 24; Stivens v. Summers, 68 Ohio St., 421; Miller v. Wilson, 15 Ohio, 108.
    Withholding the deed from record was only a badge of fraud, which could be explained. Hetrick v. Gregg, supra.
    
    The grantee must have participated in the fraud. 2 Bates’ Pleading, 1693; Section 11105; General Code; National Bank v. Gettinger, 68 Ohio St., 399.
    The plaintiff is a subsequent creditor and cannot recover as against Mrs. Dow. 2 Bates’ Pleading, 1693.
    All doubts about the weight of the evidence must be resolved in favor of the defendants. German Natl. Bank v. Young, Jr., 3 O. L. R., 287, 17 Cir. Dec, 333.
    Even if Edward W. Dow paid some installments of interest, out of money which he handled for his wife, that does not make the act fraudulent. First Natl. Bank v. Rice, 22 C. C., 184.
    Mrs. Dow had a right to assume the Hill mortgage. Buckingham v. Commercial Bank, 21 Ohio St., 131.
    Even if they had intended to defraud Mr. Dow’s creditors on October 23, 1901, the plaintiff cannot complain as it was not a creditor, nor could the Union Natl. Bank complain because it was subsequently paid in full. Webb’s Admr. v. Rolf, 9 Ohio St., 430.
    The plaintiff is not a purchaser of this land, and under the law, Mrs. Dow can hold this land as against all but bona fide purchasers. Bier deed did not have to be recorded. An unrecorded deed is good against the world, except a bona fide purchaser, for' value and without notice. Lessee of Irvin v. Smith, 17 Ohio, 226; Morris v. Daniels, 35 Ohio St., 406; Wright v. Franklin Bank, 59 Ohio St., 80.
    The recording act is only for the protection of purchasers, and is not required as against others. Section 8543, General Code; Wright v. Franklin Bank, supra; Oliver v. Moore et al., 23 Ohio St., 473.
    True, the legal maxim is that “when one of two persons must suffer by the wrongful act of another, he must bear the loss that placed it in the power of said persons to do the wrong.” But an examination of all cases announcing this doctrine will show wilfulness, or gross negligence, in the party estopped. Mere “innocent silence” does not estop. Insurance Co. of N. A. v. Miller, 1 C. C., N. S., 397.
    
      Messrs. Arnold, Morton, Irvine & Lane; Mr. F. H. Game and Messrs. Huggins, Huggins, Johnson & Hoover, for defendants in error.
    It is apparent that the contention . made by plaintiffs in error, that it was necessary for the defendant in error, The Union National Bank, to plead estoppel in order that it might recover in this action, is not well founded. The rule as to when estoppel need not be pleaded is well established in this state. Schurtz, Admr., v. Colvin, 55 Ohio St., 274.
    Plaintiff in error, Cora E. Dow, is estopped from claiming the property in dispute here as against the enforcement of the obligation contracted by her husband with The Union National Bank on the strength of his apparent and asserted ownership of said property. Brice v. Myers, 5 Ohio, 121; McGovern v. Knox, 21 Ohio St., 547; Lander v. Ziehr, 150 Mo., 403, 73 Am. St., 456; Cowling v. Hill, 69 Ark., 350, 86 Am. St., 200; Adler & Sons Clothing Co. v. Hellman, 55 Neb., 266.
    By reason of the foregoing facts, we find that two parties, Cora E. Dow and the bank, are now in a position that if the court would give effect to the rights of Mrs. Dow in preference to the bank, that a loss would necessarily be sustained by the bank, and vice versa.
    
    Assuming, for the sake of argument, that these two parties were innocent, which one under these circumstances should be given the preference ? This court has already recognized and applied the equitable doctrine which clearly affords a solution of this question. Selser v. Brock, 3 Ohio St., 302; Wilson v. Hicks, 40 Ohio St., 418; Pinney v. Merchants Natl. Bank, 71 Ohio St., 173; Dueber Watch Case Mfg. Co. v. Daugherty, 62 Ohio St., 589.
   Shauck, J.

The facts found by the circuit court leave no occasion to doubt that on October 23, 1901, Edward W. Dow conveyed the premises to his wife, Cora E. Dow, for a valuable consideration by her paid and promised; that the amount thereof and the assumption of the mortgage now held by the defendant, Hill, constituted a full consideration for the property; that on March 30, 1903, she paid to her husband the balance of said consideration and that on April 8, 1903, out of moneys so paid to him by his wife Dow paid to the bank all that he then owed to it. Her title was therefore valid as against the bank.

But both the record and the opinion of the circuit court indicate that its judgment adverse to her was upon the view that she was equitably estopped to assert a title against the bank because, although she received the deed for the property October 23, 1901, before the husband contracted his later debts to the bank, she did not place it upon record until January, 1907, after he had obtained further credit upon which the bank recovered the judgment for whose satisfaction it seeks to subject the property, and that he secured such credit by making a statement of his property in which he included the real property in controversy. Counsel for Mrs. Dow present the unquestionably sound view that the facts out of which an equitable estoppel is claimed to arise must be pleaded if there is opportunity, and there was opportunity in the present case. But we cannot learn that there was objection in the circuit court to the evidence offered by the bank to establish those facts. The case appears to have been tried there upon a transcript of the evidence offered upon the previous trial in the court of common pleas, but of course, objections interposed and exceptions taken below were waived if not renewed upon the trial in the appellate court.

The facts out of which the estoppel is said to arise are that she failed to place her deed upon record because she did not appreciate the necessity of doing so, and that without her knowledge he obtained credit from the bank by falsely representing that he owned the property, and that by reason of her failure to have her deed recorded the record did not furnish information that the representation was false. A statement of the doctrine of equitable estoppel invoked in this case made by Lord Denman has been often approved. It is: “Where one by his words or conduct wilfully causes another to believe in the existence of a certain state of things, and induces him to act on that belief so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time.” In this statement of the doctrine the adverb “wilfully” signifies the knowledge and understanding by the one making the representation that it will be acted upon. The doctrine is plainly inapplicable to the present case because Mrs. Dow did not make any representation, she did not know that the representation made by her husband would be acted upon by the bank nor even that the representation had been made.. There can be no estoppel by silence in the present case, because the bank made no inquiry which called upon her to speak. Morgan v. Spangler, 14 Ohio St., 102; Beardsley v. Foot, Id., 414.

The inference which the circuit court drew from Mrs. Dow’s failure to file her deed for record is clearly, though impliedly, forbidden by Section 8543, General Code. Our recording act itself makes the requirement that deeds shall be recorded and it defines the consequence of a failure to comply with that requirement. That consequence in the language of the section referred to is “until so recorded and filed for record, they (deeds) shall be deemed fraudulent, so far as relates to a subsequent bona ñde purchaser having at the time of purchase no knowledge of the existence of such former deed or instrument.” This provision of the statute must be accepted as exclusively defining the consequences which follow a failure to file a deed for record, and there being mere neglect, unaccompanied by any fraudulent conduct or representation on the part of the grantee, no right can accrue to anyone other than such bona ñde purchaser. That a deed thus remaining unrecorded is not deemed fraudulent as to persons other than subsequent bona ñde purchasers without notice was held by this court in Wright v. Franklin Bank, 59 Ohio St., 80. Indeed the proper judgment to be rendered upon the facts which conclusively appear in this record is so apparent from our previous decisions that this report seems to be a contribution to libraries rather than a presentation of our views upon the subject.

Judgment reversed and judgment for plaintiff in error.

Davis, C. J., Spear, Johnson, Donahue and O’Hara, JJ., concur.  