Hatcher v. Hall

In this action for a declaratory judgment [Sections S27.010 to 527.140, inch], plaintiff seeks a determination of rights and status under a written agreement between C. E. and Helen Whartenby, as "lessors,” and Melvin Hall (one of the defendants herein), as “lessee,” dated July 1, 1941, and recorded in the office of the Recorder of Deeds of McDonald County, Missouri, on September 20, 1941. (Except as otherwise specifically stated, statutory references herein are to RSMo 1949, V.A. M.S.) By this agreement, the “lessors,” for a recited consideration of “One Dollar and other valuable consideration,” purported to “lease, grant, bargain and sell unto the lessee the exclusive right to furnish all gasoline and oil products to be sold at a certain filling station” on a described tract (hereinafter called “the tract”) at *621 Lanagan, McDonald County, Missouri (then owned by the Whartenbys and presently owned by plaintiff), “for a period of ten years from the date of this instrument,” with the further provision that “at any time said station is no longer used * * * to despence motor fuel and lubricants, then this agreement shall suspend during such discontinuance and if re-opened then this agreement shall be reinstated and the time that such station was not being operated shall not run against this lease.” By its terms, the agreement was “binding upon any and all persons or corporations which take possession of said premises” and granted to the “lessee * * * prior rights to renew this agreement for a like period of time.” Since the case was tried below and has been presented here on that theory, we assume for the purposes of this opinion (without, however, so deciding) that the agreement was an instrument “whereby * * * real estate may be affected” [Section 442.380], and that the obligation, which it purported to impose, might run with the land; and, adopting the terminology of the parties, we hereinafter refer to the agreement as “the lease.”

Defendant Hall, a distributor of. Phillips “66” products, supplied the filling station on the tract until the Whartenbys closed the station in September, 1946; but, the evidence is clear .and undisputed that, when Gilbert F. Willard (joined as a defendant herein) purchased the tract on July 28, 1950, there were no pumps or “filling station equipment” on the tract, the abstract of title to the tract did not show the lease, and defendant Willard had no knowledge of it. As will become apparent from our subsequent discussion, we think it unnecessary to resolve the issue of credibility raised by the sharply-conflicting testimony as to whether Willard thereafter learned of the lease during the period of his ownership. “Right after” he purchased the tract, Willard leased a portion of it to one Norman Gast; and, under “a reseller’s contract” with Gast, defendant Hall installed storage tanks, two pumps and some signs on the tract and supplied Phillips “66” products to Gast, who operated a filling station thereon from August 11, 1950, until he “went broke” about June 30, 1951.

When plaintiff purchased the tract from defendant Willard on May 15, 1952, a cafe and package liquor store were being operated on the tract, but the filling station was not in operation. The only description of the unused station equipment then on the tract came from plaintiff who said that there were “two abandoned pumps at the place,” which “were broken down, doors off of them” and “weren’t in condition to work,” that there were “a couple of light globes, they were off,” and that there was “a Phillips sign * * * at the other end of the property.” At the time of his purchase, plaintiff was informed by Willard that Hall owned the filling' station equipment on the tract. However, Willard also told plaintiff that he (Willard) had asked Hall “to come get those pumps”; and, in response to plaintiff’s specific inquiry as to whether “Hall had any kind of lease whatsoever,” Willard had replied, “No, he has not.” The abstract of title still did not show the lease, and the conveyance by Willard to plaintiff made no reference thereto. Plaintiff first learned of the lease about two months after the date of his purchase of the tract, when defendant Hall notified plaintiff of his (Hall’s) intention to enforce the lease. Upon the foregoing state of facts, the trial court found that plaintiff “had no actual knowledge or constructive notice of the lease” and that “the lease is not binding” upon the tract. Defendant Hall appeals.

The first issue is as to whether plaintiff, a subsequent purchaser of the tract, is charged with constructive notice of the lease by reason of its recordation on September 20, 1941. Plaintiff’s position is that, for the reason (inter alia) that the acknowledgment was incomplete and insufficient, the lease was not entitled to record and.that, therefore, recordation thereof did *622 not impart constructive notice. The “acknowledgment” on the lease consists, of the simple statement “Subscribed and sworn to before me this, the 15th day .of • August, 1941,” followed by the signature (without seal attached) of one “B. F. St. Clair,” whose official status or position (if any) 'is not suggested and. who remains utterly un-’ identified either in the lease or in the record before us. '

We quickly recognize, that the language of Section 442.210 (including the forms of acknowledgment which ‘‘may be used in * * * written instruments affecting real estate”) is permissive and not mandatory, 1 and we heartily endors'e. 'the salutary principle, which has found application in a variety of circumstances, 2 that substantial compliance with statutory provisions pertaining to acknowledgments will suffice; 3 But, although the law requires nothing more than sucfy substantial compliance, it is satisfied with nothing less. 4 And, since the power to take acknowledgments’ is derived from the statutory provisions pertaining thereto and acknowledgments may be taken only by a person designated by statute [1 C.J.S., Acknowledg--ments, § 41, .p. 815; 1 Am.Jur., Acknowledgments, Section 49, p. 333], we do not impose “hypercritical requirements of technical nicety” [McClure v. McClurg, 53 Mo. 173, 175] in concluding, as we do, that “no rational liberality of construction can cure” [Cabell v. Grubbs, 48 Mo. 353, 357] the' patent defects in the “acknowledgment” to the lease in the instant case, which does not *623 even indicate whether the individual purporting to take such “acknowledgment” in 1941 was a person then authorized so to do. Section 3408, RSMo 1939. Lacking an acknowledgment substantially complying with statutory requirements,. the lease was not entitled to record [see Sections 442.380 and 59.330(1)], and recordation thereof did not impart, constructive notice under Section 442.390 to plaintiff, a Subsequent purchaser for value. 5

Nevertheless, defendant Hall contends that recordation of the lease on September 20, 1941, imparted constructive notice to plaintiff under Sections 490.340 and 490.360. Although Section 490.360 simply states that, under the conditions therein outlined, the record “shall be prima facie evidence of * execution * * *, genuineness and time of record” [consult Wells v. Pressy, 105 Mo. 164, 181, 16 S.W. 670, 674], “seems designed to provide a species of secondary evidence, and has no reference to 'the question of , notice” [Muldrow v. Robison, 58 Mo. 331, 345], the language of Section 490.340 6 would seem, at first blush, to support Hall’s contention. (All emphasis herein is ours.) But, since application of1 this statute “to ⅜11. instruments, • regardless of the time of their being executed or recorded” would be “out of harmony with many other provisions of the statute[s] on this subject” [Williams v. Butterfield, 182 Mo. 181, 188, 81 S.W. 615, 618], investigation of the legislative history and judicial interpretation of Section 490.340 becomes appropriate. The first portion of- this statute [under which “the record imparts notice”, as distinguished from the latter portion, .under which “the instrument imparts notice” (German-American Bank v. Carondelet Real-Estate Co., 150 Mo. 570, 577, 51 S.W. 691, 693)], in substantially its present language, was enacted first in 1847 [Laws of 1847, p. 95] as Section 8 of “an act to quiet vexatious land litigation” and thereafter, with unimportant modifications, was carried through the statutory revisions of 1855, 1865 and 1879. RSMo 1855, p.731, Section 46; RSMo 1865, p. 582, Section 35; Section 2305, RSMo 1879. Recognizing the well-established principle that inclusion of an existing law in a statutory revision operates only as a continuance of its existence and not as a new enactment and that such law must be construed with reference to other statutes as of the date of its original enactment, 7 our Supreme Court in 1870 *624 pointed out in Bishop v. Schneider, 46 Mo. 472, 482, that what is now the first portion of Section 490:340 derived “no additional force or power” by reason of its inclusion in the statutory revision of 1865, commented (loc. cit. 481) that “(i)t is hardly to be supposed that the Legislature intended by this section to repeal, nullify, and render nugatory the whole law in reference to the essential elements of acknowledgments and recording,” stated that “when we look at the history of the enactment, its scope and tenor, we find clearly that no such intention prevailed,” and concluded (loc. cit. 482) that this statute “applies to all conveyances made previous to the taking effect of the statutes of 1855, 8 and no further.” 9

The latter portion of what is now Section 490.340 was added and, in essential particulars, this statute assumed its present form in 1887, when Section 2305, RSMo 1879, was repealed and a new section was enacted in lieu thereof [Laws of 1887, p. 183], which, yrith trivial'changes, was carried through the statutory revisions of 1889, 1899 and 1909. Section 4864, RSMo 1889; Section 3118, RSMo 1899; Section 6313, RSMo 1909. The act of 1887 was passed for “the obvious purpose of extending protection to instruments recorded in the period between the passage of the act of 1847 [Laws of 1847, p. 95] and one year before the passage of the act of 1887” 10 [German-American Bank v. Car-ondelet Real-Estate Co., supra, 51 S.W. loc. cit. 693] and, as was held in 1904, had “application only to * * * instruments affecting real estate, executed and recorded one year prior to the taking effect of the act as amended in 1887.” Williams v. Butterfield, supra, 81 S.W. loc. cit. 617. 11

In 1913, an act was passed and approved repealing Section 6313, RSMo 1909, and enacting in lieu thereof a new section in precisely the same language [Laws of 1913, p. 345] which, without change, was carried through the statutory revisions of 1919 and 1929. Section 5368, RSMo 1919; Section 1681, RSMo 1929. In 1932,-our Supreme Court “assumed” that, if interpretation of the act of 1913 had been necessary to determination- of the case at hand (and it was not), that act would have been interpreted “in accord with the former decisions”, i. e., as limited ⅛ its operation to instruments recorded not less than one year prior to its effective date in 1913. Miller v. Proctor, 330 Mo. 43, 50, 49 S.W.2d 84, 86. And, in 1939, an act was passed and approved repealing Section 1681, RSMo 1929, and enacting in lieu thereof a new section with minor changes in language *625 [Laws of 1939, p. 411], which, without subsequent repeal and reenactment, was carried into the statutory revisions of 1939 and 1949. Section 1845, RSMo 1939; Section 490.340, RSMo 1949, V.A.M.S. From the foregoing', it is apparent that this statute has been interpreted consistently as one of repose [German-American Bank v. Carondelet Real-Estate Co., supra, 51 S.W. loc. cit. 693], that Section 490.340 could not be applicable to instruments recorded after the effective date of the last reenactment in 1939, and that recordation of the lease in the instant case in 1941 did not impart constructive notice under Section 490.340 to plaintiff, a subsequent purchaser for value.

Finally, defendant Hall asserts that plaintiff’s knowledge, when he purchased the tract, that Hall owned the filling station equipment thereon should have provoked further investigation which would have disclosed existence of the lease, and that, therefore, plaintiff is chargeable with actual notice thereof. It is true that, as our, courts have reiterated many times, notice is regarded in law as actual where the person sought to be charged therewith either knows of the existence of the particular fact in question or is conscious of having the means of knowing it, even though such means may not be employed by him; 12 and that, since notice does not mean positive information brought directly home to the person sought to be affected thereby, whatever fairly is sufficient to. put an ordinarily prudent person on inquiry constitutes notice to him of such facts as would be disclosed by reasonable pursuit and proper inquiry. 13 For, justice is not so indulgent as to encourage one to shut his eyes to circumstances which would excite the zetetic impulse in an ordinarily prudent individual, [Drey v. Doyle, 99 Mo. 459, 469, 12 S.W. 287, 289] or to throw away the key to the door of exploration through which the facts reasonably might be ascertained [Barrett v. Davis, 104 Mo. 549, 561, 16 S.W. 377, 380; James v. Hutchinson, Mo.App., 211 S.W.2d 507, 511]; and, from early times, our courts “have always recognized that the still small voice of suggestion, emanating as it will from contiguous facts and surrounding circumstances, pregnant with inference and provocative of inquiry, is as potent to impart notice as a presidential proclamation, or an army with banners.” Connecticut Mut. Life Ins. Co. v. Smith, 117 Mo. 261, 292-293, 22 S.W. 623, 629; Adams v. Gossom, 228 Mo. 566, 583, 129 S.W. 16, 21.

However, one is put on inquiry and charged with notice of the facts which would be disclosed thereby, only when “ ‘the inquiry becomes a duty, and the failure to make it a negligent omission’ ” [Laughlin v. Findlay, 324 Mo. 1021, 1024, 25 S.W.2d 464, 465(1)] ; 14 or, as otherwise stated, “‘(w)here there is a duty of finding out and knowing, negligent ignorance has the same effect in law as actual knowledge.’ ” 15 Whether the circumstances are sufficient to give rise to a duty *626 of further inquiry is ordinarily a question of fact 16 [at least where the evidence is conflicting or is such that more than one inference of fact might be drawn therefrom (Merrill on Notice, Vol. 1, Section 64, p. 61)], frequently fraught with appreciable difficulty and always determinable in the light of the circumstances of the particular case under consideration; 17 and whether, when one is put on inquiry, the exercise of common prudence and ordinary diligence [Edwards v. Carondelet Milling Co., 108 Mo.App. 275, 287, 83 S.W. 764, 768; Kitchen v. St. Louis, K. C. & N. Ry. Co., 69 Mo. 224, 265] in further investigation would have led to discovery of the information, knowledge of which is sought to he charged, likewise usually becomes a question of fact. 18

Being mindful that one of these questions of fact necessarily -was found in favor of plaintiff [Section 510.310(2); Beckemeier v. Baessler, Mo., 270 S.W.2d 782, 786(3), and cases there cited] and that, in this court-tried case, “(t)he judgment shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses” [Section 510.-310(4); Staples v. O’Reilly, Mo.App., 288 S.W.2d 670, 677(15); and • cases there cited], we would no-t be inclined, upon the ■record before us, to disagree with the finding of the capable trial judge that plaintiff did not have actual notice of the lea§e. However, we need not and do not rest disposition of .the case on this basis alone, for, on the undisputed testimony, defendant Willard,. who was plaintiff’s immediate predecessor in,title, acquired the tract on July 28, 1950, as a-bona fide purchaser for value without notice, either actual or constructive, of the lease, “(I)t is a commonplace of the law of real property that an innocent purchaser for value takes the title discharged of secret outstanding equities * * * not of record, and that, having a good title himself, he can transfer one to' a grantee who even had notice” 19 [subject only to the exception that the title may not be conveyed, free from such equities, to a former owner charged with notice (McDaniel v. Sprick, 297 Mo. 424, 249 S.W. 611, 616-618(5)], the classic statement of the reason for the rule, in the words of Chancellor Kent, being “ ‘to prevent a stagnation of property, and because the first purchaser, being entitled to hold and enjoy, must be equally entitled to sell.’ ” 20 Thus, the' title to the tract being clear of “silent, unknown equities” *627 when defendant Willard purchased in'1950 remained clear thereafter [Bradford v. Davis, Mo., 219 S.W. 617, 618] and so descended to plaintiff, a purchaser for value, irrespective of whether he had actual notice of the lease at the time of his acquisition.

The judgment of the trial court should he and is affirmed.