§ 623. A court of equity will correct a mistake and reform a deed when it can be done without detriment to innocent purchasers.

Opinion by NELSON, D. J.

The evidence in this case establishes the fact of a mistake in the mortgage executed by Jordan to Morrison, and a court of equity will, when appealed to, correct such a mistake and reform the instrument so as to express the intent of the parties thereto. This is a fundamental rule of equity jurisprudence, and, the mistake being mutual, the mortgage will be declared a lien upon the property intended as between the parties. If the titles of the Jewetts, as bona fide purchasers, have intervened, a reformation of the mortgage will not be allowed to prejudice their titles. But if their rights were subsequently acquired with notice, actual or constructive, they are subject to Morrison's lien. The delay in bringing suit to correct the mistake, which shows laches on the part of the complainant, is satisfactorily accounted for.

§ 624. Grantee of the mortgagor estopped by the recitals of his deed.

The recital in the deed from Jordan to Vinacke is evidence against him; and it being stated that a mortgage had been given, and Vinacke agreed to pay it, such recital is intended as the agreement of the parties and estops them. Vinacke has thus admitted conclusively the lien of the mortgage and assumed a personal liability. It cannot be doubted that the doctrine of privity prevails, and all persons claiming title to the property under and through Vinacke & Kennedy are privies in estate, and can be in no better situation than they are from whom the title is obtained. Carver v. Jackson, 4 Pet., 83; 6 Pet., 250; 9 Wend., 209; Story's Equity, secs. 152, 165.

§ 625. A purchaser of lands is bound to take notice of the recitals in deeds through which he claims title.

The defendants, Geo. F. and Horace A. Jewett, on investigation of the title, would necessarily discover the recital that the mortgage was intended to cover the land described in the deed, and at least were required to make inquiry of Jordan or Vinacke or Kennedy. 41 N. H., 560. The registry law of this state does not require a description of the property to be contained in the index book or reception book. R. S. Minn., secs. 156, 157, p. 126. The names are indexed, through whom the titles would be traced; and in so doing, the defendants Jewett were required to look beyond the index book and examine the book where the description is recorded, and are charged with knowledge of all facts recited therein. If they failed to do so it was negligence. The case of Shroyer v. Nickel, 55 Mo., 264, has no application to the one at bar. In that case the deed sought to be reformed was executed by a married woman, jointly seized with her husband, and the court placed the decision upon the statutory regulation specifically pointing out how a married woman could bind herself; and inasmuch as the deed, as executed (according to the statute), did not convey the land intended, a reformation of the instrument was beyond the reach of equitable interposition. The distinction between reforming a deed as to the husband and as to a wife is clearly stated in the discussion of the case above referred to. Vol. 7, Central L. J., 183.

§ 626. Statute of limitations.

It is claimed the cause of action is barred by the statute of limitations, enacting (Title II, ch. 66, p. 451, sec. 3): "Actions can only be commenced within the periods prescribed by this chapter, after the cause of action accrues, except where, in special cases, a different limitation is prescribed by statute." Sec. 6. Within six years. An action upon a contract, etc. Is this an action upon

a contract? The complainant by his bill seeks to foreclose a mortgage, and states therein that, as executed, it did not cover the property intended to be mortgaged by the parties thereto, and asks a correction of the mistake, so as to express the intention of the mortgagor and mortgagee, and make it such as they supposed was executed and delivered. If the instrument to be reformed was an agreement to execute a mortgage, the limitation of six years within which actions on contracts can be commenced might control. In my view of the case, if any statutory limitation governs, it is that prescribed by section 11 of chapter 66, viz.: "Every action to foreclose a mortgage upon real estate shall be commenced within ten years after the cause of action accrues." The complainant is entitled to a decree for the relief prayed, and it is so ordered. DILLON, J., Concurs.

NOYES v. HALL.

(7 Otto, 34-39. 1877.)

APPEAL from U. S. Circuit Court, Northern District of Illinois.
Opinion by MR. JUSTICE CLIFFORD.

STATEMENT OF FACTS.- Antecedent to the claim of the respondent, the unincumbered fee-simple title of the premises was in the father of the complainant. On the 26th of April, 1858, the owner of the tract, consisting of a farm of eighty acres, being indebted to the respondent in the sum of $1,075, mortgaged the farm to him to secure the payment of that sum. Sufficient also appears to show that the fee-simple owner of the premises, on the 4th of June, 1859, contracted in writing with the brother of the complainant to convey the same to the other contracting party for the sum of $3,000, payments to be made as therein specified; and that the brother, eight months later, sold out his interest thus acquired to the complainant, the new contract being made by consent to bear the same date as that previously given to the brother, the complainant giving his notes in the place of those given by the brother, except for $300, which he paid in cash. Payments, except for that amount, were to be made as in the previous arrangement; and the complainant alleges that prior to the commencement of the next year he entered into the possession of the premises, and that he has continued in the possession of the same from that time to the present. By the terms of the agreement, the premises were to be conveyed to the complainant by a good and sufficient deed; and he alleges that the covenantor and his wife, on the 10th of February, 1864, by deed duly executed and acknowledged, conveyed the same to him; and it appears that the deed, on the 19th of the same month, was duly recorded.

Process was served; and the respondent appeared and filed an answer, in which he sets up the mortgage given by the original owner, the foreclosure of the same, the sale of the premises by the master, and his title to the same by virtue of the master's deed to the purchaser from whom he acquired the title to the premises. Proofs were taken, the parties heard, and the court entered a decree in favor of the complainant. Due appeal was taken by the respondent to this court; and he assigns, among others, the following errors: 1. That the complainant has not made such a case as to warrant a court of equity in granting him relief. 2. That the bill of complaint does not allege any sufficient reason why it was not commenced at an earlier date. 3. That the bill of complaint does not allege that any tender of the amount required to redeem the mortgage was ever made before the commencement of the present suit. 4. That

the contract to convey the land to the complainant was subsequent to the execution of the mortgage.

Both of the notes secured by the mortgage were transferred, and it appears that the assignee instituted the suit for foreclosure. When the foreclosure suit was commenced, the present complainant was in possession of the premises, having previously paid $1,000 towards the purchase of the same under his contract; and the record shows that he was not notified of the commencement or pendency of the suit. Though in the sole possession of the premises, the complainant alleges that he was not served with process; and that no answer having been filed in the case, the bill of complaint was taken as confessed, and that a decree of foreclosure was entered, under which the premises were sold by the master for the sum of $400. None of these matters are controverted; and it is also alleged that conveyance of the premises in due form was made by the master to the bidder, and that he conveyed the same to the respondent. Since that time, as the complainant alleges, the respondent has commenced a suit against him to recover the possession of the premises.

All of these matters are formally set forth in the bill of complaint; and the complainant alleges that the respondent neither claims nor has any other or further interest or title to the premises than that derived by purchase under the decree of foreclosure, and he avers that such title is subject to his right to redeem the premises described in the bill of complaint. Appropriate allegations are also made to show that he is entitled to such relief, upon the ground that he has been at all times since the sale of the premises ready and anxious to redeem the same from the sale and purchase; that he has offered to redeem the premises of the respondent by the payment of the said sum of $100, with interest at the rate of ten per cent. from the date of the sale to the time of such tender of redemption, and that the respondent refused and still refuses to accept such payment and to release the claim and title to the premises by him so acquired; wherefore he prays that he may be declared entitled to redeem the premises by the payment of the amount of the purchase money, with interest to the date of the decree, and that the respondent, upon the payment of such amount, may be decreed to convey to the complainant all the title and interest in the premises which he acquired by such purchase.

§ 627. The recording of a deed is notice to creditors and subsequent purchasers, and so is open, actual, visible possession.

Deeds, mortgages, and other instruments of writing which are authorized to be recorded, take effect, by the law of that state, from and after the time of filing the same for record, and operate as notice to creditors and subsequent purchasers. R. S. of Illinois, 1874, 278, sec. 30. Argument to show that the respondent had due notice of the claim of the complainant is quite unnecessary, as the case shows, beyond controversy, that the deed under which he acquired the title to the premises was duly recorded, and that he was, before that time, in the open, visible and exclusive possession of the same, which, by the settled law of that state, is constructive notice to creditors and subsequent purchasers. Truesdale v. Ford, 37 Ill., 210. Record evidence of a conveyance operates as 'notice, and so may open possession; the rule being that actual, visible and open possession is equivalent to registry. Caheen v. Breckenridge, 48 id., 91; Dunlap v. Wilson, 32 id., 517; Bradley v. Snyder, 14 id., 263. Viewed in the light of these authorities and the allegations in the bill of complaint, it is clear that the first assignment of error must be overruled. Nor is it necessary to enter into any discussion of the second error assigned, as it appears that the

complainant filed the bill of complaint to redeem the premises as soon as it became necessary to vindicate his title and possession against the ejectment suit instituted by the respondent.

§ 628. One in possession of mortgaged premises, claiming them, who is not made a party to a bill for foreclosure, is not bound by the decree.

Beyond all doubt, the contract under which the complainant claims the right to purchase the premises is subject to the mortgage held by the respondent; but it is a sufficient answer to the third and fourth assignments of error to say that the decree sustains the validity of the mortgage, and makes ample provision to secure to the respondent all the rights which he acquired by virtue of the sale and purchase under the foreclosure. Parties interested in the premises who were not served with process are not bound by that decree, and it follows that the respondent took his title subject to the rights of the complainant acquired under the deed, just the same as if no such decree had ever been made. Suppose that is so, then it only remains to examine the decree, and ascertain whether it makes due provision to preserve all the rights of the respondent. Coming to the proofs, it will be sufficient to say that the finding of the court below shows that all the material allegations of the bill of complaint are fully sustained, which is all that need be said in support of the theory of fact embodied in the decree. Such being the fact, the court decreed that the complainant was entitled to relief, he paying to the respondent, within one hundred days from the date of the decree, the sum of $913.33, with costs of suit; and that in default of such payment the bill of complaint shall stand dismissed; and that the respondent, if the payment be made, shall, within thirty days thereafter, execute to the complainant a good and sufficient deed, as prayed in the bill of complaint. Examined in the light of these suggestions, as the case should be, it is clear that the decree is correct, and we are all of the opinion. that there is no error in the record.

Decree affirmed.

§ 629. Actual notice.- The grantee in a deed of trust is bound by actual notice of a prior unrecorded deed; and where such grantee sells the property for more than the amount of the debt secured by the unrecorded deed of trust, he becomes a trustee for the amount of the claim of the grantee in such unrecorded deed of trust. Kurtz v. Bank of Columbia, 2 Cr. C. C., 701.

§ 630. The title of a purchaser from the second grantee, who takes with notice of the prior deed, but with an assurance from the grantee in such prior deed that all will be right, cannot be disturbed.

Ibid.

§ 631. A purchaser having knowledge of a prior unrecorded mortgage takes subject thereto. Lord v. Doyle, 1 Cliff., 453, 458.

§ 632. It is no defense to one who takes a deed of land with actual knowledge on his part of a previous mortgage upon it that the parties to the mortgage agreed that it should not be recorded, and the mortgagee received a written guaranty "to hold him harmless from any loss by reason of not recording the deed." Ibid.

§ 633. Constructive notice of the possession of a part of the premises covered by a mortgage does not affect lands outside the limits of the possession. Daggs v. Ewell,* 3 Woods, 844.

XII. VOID AND USURIOUS MORTGAGES.

SUMMARY-Mortgage executed on Sunday, § 634.- Intent to give unlawful preference, § €35.— Illegal consideration, § 636.

§ 634. A mortgage executed on Sunday, without the knowledge of the mortgagee, and dated, acknowledged and delivered on the following day, is not void. The mortgagor is estopped from showing that the instrument was executed on a day other than that of which it bears date. Wilson v. Winter, §§ 637-640.

§ 635. A mortgage made with the intent to give the mortgagee an unlawful preference is not affected by that fact, if such intent was not carried out. Corbett v. Woodward, §§ 641647.

§ 636. A mortgage founded in part on a legal and in part on an illegal consideration will be held valid as to the former and void as to the latter. Ibid.

[NOTES.-See $$ 648-656.]

WILSON v. WINTER.

(Circuit Court for Wisconsin: 6 Federal Reporter, 16-22. 1881.)

Opinion by BUNN, D. J.

STATEMENT OF FACTS.- This action is brought by the plaintiff, who is a resident of New Jersey, against the defendants, who reside in the county of Eau Claire, Wisconsin, to foreclose a mortgage for the sum of $1,200, executed by the defendants to the plaintiff on July 8, 1878, upon certain land of the defendants. The mortgage is collateral to a bond executed by the defendants at the same time. The defendants' answer, which is under oath, sets up several defenses: First, they deny the execution of the bond and mortgage sued upon. Second, they allege that they are Germans by birth, and cannot read or write the English language; that they made an agreement with an attorney and agent of the plaintiff for a loan of $1,200 on five years' time, with ten per cent. annual interest; that to carry out said agreement they executed, acknowledged and delivered the bond and mortgage set out in the complaint, which had been prepared for them by the plaintiff's attorney, supposing, without reading them, that they were a bond and mortgage running five years, with ten per cent. interest, payable annually, whereas the mortgage was, in fact, so drawn as to fall due in four years' time, and the interest was made payable semiannually; and the mortgage also contained a provision that, in case the interest remained at any time overdue for ten days, it should be optional with the mortgagee to declare the whole sum due, of which provision they were ignorant when they signed the mortgage. Third, that the bond and mortgage were made, executed and delivered on Sunday, the 7th day of July, 1878, instead of July 8, 1878, the day of their date, and are consequently void under the Sunday law. There is no evidence whatever to support the first defense. There was a great deal of testimony taken in support of the second, but it all goes but a small way to defeat the mortgage.

§ 637. An unauthorized stipulation in a mortgage will not, in the absence of fraul, vitiate the mortgage.

The defendant Johann Winter testifies that he applied to R. D. Campbell, residing at Augusta, near where defendants reside, to obtain for him a loan of money, and offered to pay him $50 to get him a loan of $1,200 for five years, at ten per cent., and that Campbell agreed to get it for him; that after Campbell had arranged with J. F. Eilis, an attorney at Eau Claire, to secure the loan, and after Ellis had obtained a promise of it from the plaintiff, Campbell, who was himself an attorney, drew up the papers, and presented them to the defendants for their signatures, stating that they were all right. Defendants thereupon executed the bond and mortgage without requiring them to be read or explained to them, and not being able to read them themselves; and on the next day went to Eau Claire and consummated the loan with Ellis by delivering the papers and getting the money, without reading the bond and mortgage, or requiring any further explanation of their contents. The mortgage contains a stipulation for the payment of semi-annual interest on the 1st day of December and June in each year; is drawn to become due on July 7, 1882, four years