Just for the Record (Part II of II)
Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Spring 2004, Volume 3, Number 2
Just for the Record
(Part II of II)
by Gary F. Casaly, Special Counsel
[This article is a continuation of the article "Just for the Record (Part I of II)" in Vol. 3, No. 1 of The Massachusetts Focus.]
Let's continue our review of the history and application by the courts of the recording statute. In my last article I started off with the Chaucer-like 1640 enactment of the Colonial recording law and ended up two pages later noting that many problems that would arise by reason of a defective recording would be cured by a statute passed more than three hundred years thereafter. A lot went on during those three centuries and some of the case law and statutory enactments were discussed in the article. But there are still more things to explore about the recording law, and some of them may surprise you.
In his treatise Deeds, Mortgages and Easements (Wright & Potter Printing Company, Revised Edition, 1947), Albert Partridge proclaims in one of the most obvious understatements I have ever read that, "It is a matter of common knowledge that there is an advantage gained by speedily recording a deed in the registry of deeds for the county or district where the land lies." That's for sure! The "advantage gained," of course, is perfecting the interest conveyed from the possible intervention of another, but theretofore unrecorded, interest. But the recording statute is a bit more sophisticated than "who gets on title first." In fact, by court edict after the original Colonial law, and thereafter by legislative amendment, the concept of "actual notice" was injected into the terms of the statute so that it, to the same effect as an actual recording of another instrument, could neutralize the protection that the recording statute would otherwise provide. In this regard, the statute, G.L.c. 183, §4 provides:
A conveyance of an estate in fee simple, fee tail or for life, or a lease for more than seven years from the making thereof, or an assignment of rents or profits from an estate or lease, shall not be valid as against any person, except the grantor or lessor, his heirs and devisees and persons having actual notice of it, unless it, or an office copy as provided in section thirteen of chapter thirty six, or, with respect to such a lease or an assignment of rents or profits, a notice of lease or a notice of assignment of rents or profits, as hereinafter defined, is recorded in the registry of deeds for the county or district in which the land to which it relates lies.
What is this "actual notice" that the statute speaks of that can "undo" a conveyance in favor of a prior unrecorded interest? What facts are necessary to satisfy this requirement? The notice that the statute speaks of is a question of fact to be established by a jury, but the courts have generally construed the requirement of actual notice "with considerable strictness," and have stated that "[k]nowledge of facts which would ordinarily put a party upon inquiry is not enough." McCarthy v. Lane, 301 Mass. 125 (1938). In McCarthy the issue before the court was one concerning competing chains of title to a disputed parcel of land and the question of "actual notice" under the statute. The dispute centered around the "call for abutters" in the competing deeds. The facts in the case were that Francis Weld owned all the land at one time. Weld conveyed the disputed parcel to the petitioner's (McCarthy) predecessor in title by a deed recorded on June 16, 1891. Prior to that time, however, Weld had given a deed to the respondent's (Casey) predecessor in title which included a portion of the land conveyed in the first mentioned deed, but the Casey deed was not recorded until after the McCarthy deed on June 24, 1891. The deed to McCarthy's predecessor made mention of Casey's predecessor as an abutter, even though the deed to Casey's predecessor had not yet been recorded. Ultimately, the two chains came down to McCarthy and Casey, respectively. When McCarthy attempted to register his title Casey objected, claiming that McCarthy's predecessor, and therefore McCarthy himself, had "actual notice" of the deed to Casey's predecessor, by reason of the mention in the deed to McCarthy's predecessor of Casey's predecessor being an abutter. The court disagreed:
References in the deeds in the petitioner's chain to title to Casey and his predecessors as adjoining owners on the south would not require a finding that the grantees had actual notice of a deed which encroached upon the land being acquired by them.
This does not mean that confusing or ambiguous references in deeds to abutters who "don't line up" can be ignored; obviously, those references can be to prior-recorded instruments that were "missed" in the examination of title. But what the court is saying here is that such references will not themselves reach the level of "actual notice" of off-record instruments. The court is also saying that such references will not impose upon the grantee an obligation to make further inquires.
The McCarthy decision should be distinguished from that in Hughes v. Williams, 218 Mass. 448, 105 N.E. 1056. In Hughes, just like in McCarthy, the dispute arose in connection with a registration proceeding. The petitioner (Hughes) claimed his title under a sheriff's sale, which was based upon an execution, which in turn had grown out of an attachment in an action brought by Duckrey against Jones. Jones had acquired the title of record from Williams. However, upon his acquisition Jones immediately reconveyed the title back to Williams by deed that was not recorded. Williams retained occupation of the property. The attachment was recorded against Jones while he was in record title, and the deed from Jones to William did not appear of record until just before Hughes purchased it at the sheriff's sale. Hughes claimed superior title under the record that had shown Jones as the owner at the time of the attachment; but Williams asserted that his title was paramount because Duckrey knew of the deed back to him when the attachment was recorded and that with the recording of the deed from Jones to Williams occurring before Hughes took title at the sheriff's sale, Hughes too knew of the conveyance.
Hughes' knowledge would become relevant only if Duckrey at the time of the attachment had knowledge of the unrecorded deed from Jones to Williams. Noting that attaching creditors hold their title in the same fashion as purchasers, the court said, "If [Duckrey] did not have actual notice of the unrecorded deed at the date of the attachment . . . the petitioner even if chargeable with notice at the sale, would succeed to Duckrey's title by force of the levy."
There was evidence that the petitioner knew of the existence of the deed to Williams before the sheriff sale because his counsel had told him about it as a result of a search of the record. In quoting from George v. Kent, 7 Allen 16, the court said, "Intelligent information of a fact, either verbally or in writing, and coming from a source which a party ought to give heed to, is generally considered as evidence of [actual notice] . . . ." But the real question was whether Duckrey knew of the deed to Williams at the time he attached the property in Jones' name. The court noted there was evidence to show this to be the fact, but various erroneous jury instructions required the issue to be retried. The point of Hughes, however, is that the type of notice involved in that case, namely knowledge of the existence of a deed, is much different than the type of surmise that occurred in McCarthy. Knowledge of the existence of a deed or other instrument is to be distinguished from recitations in deeds with no actual notice of an unrecorded underlying document to support them.
Both McCarthy and Hughes involved the question of actual knowledge and the effect it would have on pending registration proceedings. Cases like Killam v. March, 316 Mass. 646, 55 N.E.2d 945 involve notice questions with respect to land that has already been registered. In Killam, the court held that a purchaser of registered land who had actual notice of a lease for more that seven years was subject to it even though it did not appear on the certificate of title. Under the decision in Killam it would seem that if one discovers a deed on the "wrong" (recorded) side at the registry of deeds that describes the registered land at issue that it too would be actual notice of the existence of the conveyance and would result in the purchaser of the registered land taking title subject to those outstanding rights.
A case cited in Partridge's treatise is Trull v. Bigelow, 16 Mass 406, which rendered a surprising (but seemingly fair) result. The facts in the case were:
|Transaction||Date of Instrument||Date of Recording||Notice Factor|
|1||A conveys to B|
|2||A conveys to C|
|C knows of #1|
|3||C conveys to D|
|J does not know of #1|
|4||D conveys to E|
|E knows of #1|
The court held that E had good title.
Deed #2, though given after Deed #1 is recorded prior to it. That's the key here. E, when starting his title will find Deed #2 in his search and will go no further. And since D's title is indefeasible (he has no knowledge of Deed #1), the court held that E stepped into his shoes when he purchased from D, even though he knew of Deed #1 (not from record examination, but from his own knowledge).
The Trull decision was questioned by Chief Justice Shaw in Flynt v. Arnold, 2 Met. 619, and appears never to have been cited since, so its continued authority is unknown.
Actual notice of a competing instrument will defeat an otherwise good title of record. It is a substitute for the constructive notice that a recording would have provided.
But what if an instrument is actually on record? Will it always impart constructive notice to those dealing with the title? In George v. Wood, 9 Allen 80, after a mortgage had been recorded, a portion of the mortgaged premises was conveyed by the mortgagor and the mortgagee thereafter, without knowledge of the deed, gave a partial release to another portion of the mortgaged property. In connection with a dispute as to whether the partial release would in some way under the theory of marshaling of assets impair the security upon the land that was conveyed and upon which the mortgage remained outstanding, the court stated that, "We are not aware of any adjudged case in which the record of a deed has been held to be constructive notice to any persons other than subsequent purchasers, or those claiming title under the same grantor." In other words, the mortgagee was not bound by the notice that the recording statute imparted with respect to the latter-recorded deed and, since he did not have actual notice or knowledge of the deed, he was not bound by it.
Similarly, in Strong v. Stoneham Cooperative Bank, 2 Mass.App.Ct. 828, where a first mortgagee entered into agreements with the borrower modifying the mortgage and increasing the interest rate, the court said that the amended mortgage would not be adversely affected by the then existing subordinate second mortgages that it was unaware of. "We need not decide whether [the agreements] were valid against nonconsenting junior encumbrancers of whom the bank had actual or constructive notice (compare Guleserian v. Fields, 351 Mass. 238, 241 242 ) since there was no evidence that the bank had such notice. While it appears that the junior mortgages were recorded before the amendatory agreements had been made, the recording of those mortgages was not constructive notice of their existence to the mortgagee under the first mortgages. See George v. Wood, 9 Allen 80, 83 84 (1864); Dixon v. Smith, 181 Mass. 218, 221 (1902); Clarke v. Cowan, 206 Mass. 252, 255 (1910). Cf. Hardy v. Beverly Sav. Bank, 175 Mass. 112, 113 114 (1900)."
The decisions in George and Stone don't mean that one should go and amend mortgages or make loan disbursements under security instruments without doing title rundowns, but they do tell us how the courts have interpreted the constructive notice provisions of the statute.
One final note. There are some situations where the record title will not protect a party relying upon it. For example, with one exception (noted below), the recording statute does not apply to one dealing with the record holder of a mortgage. The mortgagee may have transferred the note or given an unrecorded assignment, and in those instances, though the record title shows the mortgagee as the holder, this is not the case and the off-record instruments will bind a purchaser. See Lamson & Co., Inc. v. Abrams, 305 Mass. 238, 25 N.E.2d 374. "The security (mortgage) follows the debt" is the controlling rule here, regardless of the record status of the mortgage. The exception to this rule is found in G.L.c. 183, §54 which provides that, "The recordation of a duly executed and acknowledged deed of release or written acknowledgment of payment or satisfaction as provided herein shall be conclusive evidence that the mortgage has been discharged notwithstanding the fact that the party signing such instrument may have assigned the note or other evidence of debt to another party, unless such assignment had been duly recorded prior to the instrument discharging the mortgage." This statute, which applies exclusively to discharges, is the only statute I am aware of that makes a "cut out" to the common law rule announced in the Lamson decision.
As alluded to at the end of Part I of this article, bear in mind that these discussions relating to constructive notice afforded by the recording statute and the lack thereof if an instrument does not conform to some requirement of law, such as an acknowledgement for instruments required to be acknowledged in order to be recorded, has been mitigated for instruments of record for more than 10 years by G.L.c. 184, §24, which provides:
When any owner of land the title to which is not registered, or of any interest in such land, signs and instrument in writing conveying or purporting to convey his land or interest, or in any manner affecting or purporting to affect his title thereto, and the instrument, whether or not entitled to record, is recorded, and indexed, in the registry of deeds for the district wherein such land is situated, and a period of ten years elapses after the instrument is accepted for record, and the instrument or the record thereof because of defect, irregularity or omission fails to comply in any respect with any requirement of law relating to seals, corporate or individual, to the validity of acknowledgment, to certificate of acknowledgment, witnesses, attestation, proof of execution, or time of execution, to recitals of consideration, residence, address, or date, to the authority of a person signing for a corporation who purports to be the president or treasurer or a principal officer of the corporation, such instrument and the record thereof shall notwithstanding any or all of such defects, irregularities and omissions, be effective for all purposes to the same extent as though the instrument and the record thereof had originally not been subject to the defect, irregularity or omission, unless within said period of ten years a proceeding is commenced on account of the defect, irregularity or omission, and notice thereof is duly recorded in said registry of deeds and indexed and noted on the margin thereof under the name of the signer of the instrument and, in the event of such proceeding, unless relief is thereby in due course granted.
This is a handy little statute with which to become familiar. It can save a lot of title headaches when you run into one or more of these problems in your back chain of title that would otherwise call into question the effectiveness of the recording of an instrument that made it to record even though it perhaps should not have because of one of these "defects, irregularities or omissions."
1 Of course, by the time McCarthy and Casey got into title the initial deeds of the two competing chains of titles had both been recorded. The court commented on this: "Any grantee claiming under the [McCarthy chain] who did not himself have actual notice of the [first deed in the Casey chain] acquired a title superior to that of grantees claiming under the [Casey chain], even though that deed may have borne an earlier date than the [first deed in the McCarthy chain]; and this remains true, even though some former grantee [in the McCarthy chain] may have had such notice. Morse v. Curtis, 140 Mass. 112, 2 N.E. 929." [Back to Text]
2 The argument that the act of registration only passes title to registered land under G.L.c. 185, §57, and that a deed therefore recorded on the recorded side could be ignored, most likely would not prevail, because under Federal National Bank v. Gaston, 56 Mass. 471, 152 N.E. 924 the court held that a mortgage of registered land that had not yet been registered would nonetheless bind the heirs and devisees of the grantor and, supposedly, those in other unprotected categories, namely persons having actual knowledge of it
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