FIRST NATIONAL BANK vs. MORSELL ET AL.

FIRST NATIONAL BANK vs. MORSELL ET AL. I. A deed of trust to secure a present indebtedness, and also to secure future advances within a given time, and to a specified amount, is a good and valid security unless some right intervenes before the advances are made. II. It is sufficient compliance with the revenue laws, if the deed is stamped for the amount of the then debt, and it is also sufficient if each bond taken on a new advance to be secured by the deed is stamped for the amount it represents. III. A judgment creates a lien on an equity of redemption of real estate from the time it is recorded. STATEMENT OP THE CASE. The object of this bill is to establish and enforce the lien of a judgment upon an equity of redemption on lot 44, reservation 10, in the city of Washington, and to have two deeds of trust upon the same property declared defective by reason of not being properly stamped. The judgment in favor of the bank was docketed January 24,1871, and that of Skinner & Co., intervening creditors, February 20,1871. The defendant, Morsell, on about the 4th day of November, 1867, purchased said lot from the defendant Howard, and executed a deed of trust to secure the payment of the purchase-money. There is no objection to the payment of the balance due thereon, amounting to about $1,000. On or about the 21st day of October, 1869, said Morsell executed and delivered a second deed of trust to the defendants, Jones and Woodward, upon the same property, to secure the payment of a bond in the penal sum of ten thousand dollars, of even date with said deed, to the defendant, the Washington Co-operative and Deposit Association. This deed recites that Morsell is indebted to the said association in the sum of $3,050 then advanced to him, and that said deed is made to secure the payment, “as well the said sum of $3,050, as also any and all other and future advances which may hereafter, within five years from the date hereof, and to the extent of said sum of ten thousand dollars, be made by said association to said Morsell. ” This deed was stamped as a security for $3,050, the then actual debt. Up to the 22d day of January, 1870, the association had advanced to Morsell at different times the sum of $6,000, and had taken from him as security for such advances nine other bonds, in addition to the bond mentioned in and secured by the deed of trust of October 21,1869, and of like tenor, and expressed on their face to be secured by the deed of trust last mentioned, and each bond was stamped for the amount it represented at the time of its execution. March 4,1871, a third deed of trust, executed by Morsell to Jones and Edson, on the same property, was recorded. This deed was made to secure a bond in the penal sum of $10,000, and the money actually advanced by the same building association is therein stated to be $1,060. This deed bears a stamp of the value of $1.50. On the 22d day of September, 1871, this bill was filed, and afterward in pursuance of a decree of the court the property was sold. The cause was then referred to the auditor to state the trustee’s account and to distribute the fund. The auditor awarded priority to the building association’s claims under both deeds. There was not sufficient funds to pay all of these claims of the association. The judgment-creditors then filed exceptions to the auditor’s report, and the cause was thereupon certified here for hearing in the first instance. J. J. Johnson and R, K. Elliott, for building association, contended that— The judgment in the present case was no lien at law upon Morsell’s equity of redemption in the property, the proceeds of which are in controversy here. Assuming it to have been a lien in equity, it could not become such, under the circumstances of this case, until the building association had had notice of proceedings in equity to enforce it. This, it is submitted, has always been the uniform rule in this District prior to the passage of the a oft of the local legislature, (August, 1871,) constituting judgments at law liens upon equities of redemption. A court of equity will not treat a judgment as a lien per se on equitable estate. 2 Story’s Eq. Jur., sec. 1216, (6.) There was no illegality in the failure to stamp the first deed of trust executed by the defendant Morsell, to secure the building association, as a security for ten thousand dollars, for the reason that, as the advances were made under its provisions, bonds duly stamped were and could have been legally taken, and the statute does not contemplate a double stamp-tax when two papers having reference to the same security are executed. Act of June 30, 1864, sec. 152, 2 Brightley’s Digest. Enoch Totten for complainant and creditors: First. The deed of trust of October 21, 1869, constitutes an incumbrance for only the sum of $3,050. That sum was actually advanced, and was the present debt at the time the deed was made, and the deed was stamped for that sum. In order to render it an incumbrance of record for $10,000, it was necessary to put upon it a stamp of the value of $10. 2 Brightley’s Digest, 379 (§ 371) and 371 (§ 333.) Second. The deed of trust of March 1, 1871, is defective in the same way and falls under the same rule. Third. The judgment of the bank, and that of Means, Skinner & Co., having been docketed before the record of the deed of trust of March 1, 1871, are entitled to priority over it. A judgment docketed constitutes a lien upon an equity of redemption. Coombs vs. Jordan, 3 Bland’s Ch. R., 302; Lee vs. Stone, 5 G. & J., 19; Campbell vs. Morris, 3 Harris & McH., 535; Taylor vs. Thompson, 5 Peters, 367; 1 Powell on Mortg., 461; Haley vs. Williams, 1 Leigh, 140; Coutts vs. Walker, 2 Leigh, 268; Benton vs. Smith, 13 Peters, 483; Coote on Mortg., 31 and 516; McCormick vs. Higby, 8 Blackford, 99. [MAJORITY — Cartter, Ch. J.,] Cartter, Ch. J., delivered the opinion of the court to the effect following: He first disposed of the objection that the deed of trust dated October 21,1869, was not properly stamped, and held that the deed was a security at the time of its execution only for the sum of $3,050, and was properly stamped for that amount. The deed recites that it is given to secure the amount then due, and all future advances within five years from the date thereof to the extent of $10,000. It is a settled principle of law that a mortgage or other security is good and valid for the purpose of creating a lien for future advances, unless an intervening right or equity may claim priority by effecting the title before the advances are made. The bonds taken in this case represented on their face that they were secured by the deed of trust. A new bond was given for each advance, and was stamped for the amount represented, so that the additional stamps were used from time to time as the indebtedness to be secured was increased. This is a sufficient compliance with the revenue laws enacted by Congress relating to this subject; and as the bonds had all been executed and delivered previously to complainant’s judgments, the auditor in making his computation properly gave them a preference over the latter. The same observations would apply to the trust-deed of March 11,1871, were it not for the fact that it had no existence until a period of two months after the judgments in favor of the bank and the intervening creditors. The building association made a new loan and took a new security for it which did not attach to the equitable title of the property until after the judgments had taken effect. It is impossible to say that the indebtedness secured by the last deed accrued as an advance under the first deed, for it was an independent transaction, and cannot be made to overreach any previously-acquired right. The question then occurs, whether the equity of redemption existing in Morsel), the judgment-debtor, was liable to the lien of the judgments. The court are of opinion that equity recognizes the lien and will enforce it against subsequent incumbrances. This doctrine has been much discussed, and it is said, has never prevailed in this District. The auditor in his report states that this is the first instance in which the question has been presented, so that it is still open for determination here. We think the jurisdiction may be maintained on principle. It is well settled in equity that a deed like that under consideration is a mere security, and the grantor is regarded as still being the owner of the property. If then he has the title in equity, is there any more reason for a judgment being a lien upon the legal estate at law than there is for it being a lien upon the-equitable estate in this jurisdiction? The relief ought to be administered only after the judgment-creditor has exhausted his remedies at law. This doctrine has been maintained under certain circumstances in Virginia and Maryland, and has been referred to with approbation by the Supreme Court of the United States. (United, States vs. Morrison, 4 Pet,, 124; Burton vs. Smith, 13 ib., 183.) The judgments in this case antedate tire last trust-deed, and we think the plaintiffs are entitled to assert their prior lien. The third exception to the auditor’s report, which postpones the judgments to the deed, is sustained, and a decree may pass in conformity with the decision now made.