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South Carolina Nat Bank V Guest 102 SE2d 215 232 SC 367 SC 1958

This document summarizes a 1958 South Carolina Supreme Court case regarding the priority of two mortgages on the same vehicle. The Greenville bank held the first mortgage but did not record it until after the Greenwood bank recorded its later mortgage on the same day. The court found that under South Carolina law, the later recorded mortgage has priority over the earlier unrecorded mortgage. The Greenwood bank's mortgage was therefore determined to have priority as a subsequent lien creditor without notice of the earlier Greenville mortgage.

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29 views4 pages

South Carolina Nat Bank V Guest 102 SE2d 215 232 SC 367 SC 1958

This document summarizes a 1958 South Carolina Supreme Court case regarding the priority of two mortgages on the same vehicle. The Greenville bank held the first mortgage but did not record it until after the Greenwood bank recorded its later mortgage on the same day. The court found that under South Carolina law, the later recorded mortgage has priority over the earlier unrecorded mortgage. The Greenwood bank's mortgage was therefore determined to have priority as a subsequent lien creditor without notice of the earlier Greenville mortgage.

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Jonah
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We take content rights seriously. If you suspect this is your content, claim it here.
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South Carolina Nat. Bank v. Guest, 102 S.E.2d 215, 232 S.C.

367
(S.C. 1958)

Page 215

102 S.E.2d 215


232 S.C. 367
The SOUTH CAROLINA NATIONAL BANK, Greenville, South
Carolina, Appellant,
v.
C. D. GUEST et al., of whom The State Bank and Trust
Company, is, Respondent.
No. 17393.
Supreme Court of South Carolina.
Feb. 24, 1958.

Page 216

[232 S.C. 368] Rainey, Fant, Brawley & Horton, Younts & Spence,
Greenville, for appellant.

Grier, McDonald, Todd, Burns & Bradford, Greenwood, for respondent.

[232 S.C. 369] TAYLOR, Justice.

The question presented in this appeal involves the priority of one of two
chattel mortgages, one held by Appellant, South Carolina National Bank of
Greenville, South Carolina, and the other by Respondent, The Bank of
Greenwood, South Carolina.

The facts are not in dispute. C. D. Guest, a resident of Greenville


County, somewhere between 9 a. m. and 1 p. m. on January 5, 1955, pro-
cured a loan of $3,000 from said Greenville Bank and by way of security ex-
ecuted a chattel mortgage upon a certain Chrysler automobile. Later, on the
same day, at some time after 3 p. m., the said C. D. Guest borrowed
$3,515.24 from the Ninety Six Branch of the Greenwood Bank upon the
same vehicle, representing that it was free of liens.

The Greenville Bank recorded its mortgage in the Office of the Register
of Mesne Conveyances for Greenville County on January 7, 1955, at 9:17 a.
m. Thereafter, on the same day, the Greenwood Bank likewise did so at
10:00 a. m. Thus, it is seen that while the Greenville mortgage was first in
point of time of execution and recordation, it was not of record at the time of
the execution of the Greenwood mortgage. There is no contention but that
the Greenwood Bank acted in good faith and without notice of the Greenville
mortgage.
South Carolina Nat. Bank v. Guest, 102 S.E.2d 215, 232 S.C. 367
(S.C. 1958)

[232 S.C. 370] The controlling consideration is the force and effect to be
given the applicable Recording Act of 1925, 34 Statutes at Large 85, now ap-
pearing as Section 60-101, Code of Laws of South Carolina, 1952:

'* * * all mortgages or instruments in writing in the nature of a mortgage


of any property, real or personal, * * * and generally all instruments in writ -
ing required by law to be recorded in the office of the register of mesne con-
veyances or clerk of court in those counties where the office of register of
mesne conveyances has been abolished or in the office of the Secretary of
State delivered or executed on or after August 1, 1934, except assignments
and satisfactions of conditional sale contracts securing the purchase money
of motor vehicles or refrigerators, shall be valid so as to affect the rights of
subsequent creditors (whether lien creditors or simple contract creditors) or
purchasers for valuable consideration without notice

Page 217

only from the day and hour when they are recorded in the office of the regis-
ter of mesne conveyances or clerk of court of the county in which the prop-
erty affected is situated, in the case of real estate or in the case of personal
property, in which the owner of such property resides, if he resides within
the State, or, if he resides without the State the county in which such per-
sonal property is situated at the time of the delivery or execution of such
deed or instrument.'

'A study of the development of the Recordation Acts (Sec. 8875 of the
Code) shows that they were an outgrowth of efforts to protect 'subsequent
purchasers and creditors' from 'secret liens'. These are the true key words to
any proper study and application of the principles. Such study shows (and it
is undisputed) that at the common law, a mortgage, deed or other instru-
ment, although not recorded, was good not only between the parties but
against the world. This led to difficult situations and to hardships when
thereafter innocent purchasers and mortgagees were involved. In other
words, the evil of such secret transfers and secret liens [232 S.C. 371] be-
came evident, and resulted in the equitable doctrine of 'subsequent pur-
chaser for value without notice' as well as the development of the Recording
Acts.

'Therefore, the important point is that the common law doctrine as to


the validity of a paper such as that of the plaintiff is applicable here except
insofar as it is limited if at all by the terms of the Recording Act. By its terms,
however, the Act (Sec. 8875) merely places a limitation upon such validity
insofar as it affects the rights of subsequent purchasers of creditors without
notice. * * *' Goodrich Silvertown Inc., v. Rogers, 189 S.C. 101, 200 S.E. 91,
93.
South Carolina Nat. Bank v. Guest, 102 S.E.2d 215, 232 S.C. 367
(S.C. 1958)

An exhaustive review of the various Recording Acts throughout the


country is found in Patton on Titles beginning at page 33. There they are
classified into three groups:

(1) Those which give priority to the instrument first recorded, whether
prior or subsequent to another.

(2) Those which invalidate an instrument as against subsequent ones


acquired in good faith before its recordation.

(3) Those which give protection to a subsequent paper as against a prior


one, provided it is first to be recorded.

Our Act falls within the second group as do approximately two thirds of
those of the other States. The author, citing numerous authorities, observes:

'Under this type of Act here considered the earlier purchaser can protect
himself from a subsequent purchaser who is without notice of his rights only
by recording his conveyance before the latter conflicting interest occurs. A
later recording will not affect the rights of a subsequent purchaser even
though prior to the recordation of the conveyance to the latter. And as dis-
tinguished from the Acts considered in the ensuing section (referring to the
third classification, insertion added) the protection to the subsequent pur-
chaser without notice exists regardless of when he records or whether he
ever records his own conveyance.'

[232 S.C. 372] In this connection, see also Turpin v. Sudduth, 53 S.C.
295, 31 S.E. 245, 306; and the annotation contained in L.R.A. (1916D), page
244.

The present Act provides no grace period for recording; therefore, the
instrument should be recorded promptly upon execution to assure its valid-
ity against subsequent liens. For a mortgagee not to do so renders him liable
to the risk of a mortgage being displaced by a subsequent lien fastening
upon the property before its registration. While we are concerned here with
construction of a statute, it is equitable that any risk incurred by one failing
to protect himself by promptly recording his mortgage should fall upon him
who fails to act

Page 218

promptly rather than upon another who can only rely upon the record for
his protection, Epps v. McCallum Realty Company, 139 S.C. 481, 138 S.E.
297.
South Carolina Nat. Bank v. Guest, 102 S.E.2d 215, 232 S.C. 367
(S.C. 1958)

The oft cited case of King v. Fraser, 23 S.C. 543, was cited by both Ap-
pellant and Respondent as authority for their respective positions; however,
we are of opinion that the reasoning in that case supports an affirmance of
the case at bar. For a review of the Recording Acts from 1843 through 1914,
see In re Syleecau Mfg. Co., D.C., 17 F.2d 503, 506, all of which beginning
with and subsequent to the 1876 Act, place subsequent creditors and subse-
quent purchasers in the same category and are referred to as 'subsequent
creditors and purchasers.'

In King v. Fraser, supra, the question was whether a mortgagee, whose


mortgage had not been recorded within the prescribed time but was after-
wards recorded, took precedence over the general unsecured creditors of the
mortgagor; and it was held that the mortgage had priority over all the unse-
cured creditors, including those whose debts were contracted between the
date of the execution of the mortgage and the date of its record, but that it
was otherwise as to creditors who had acquired a lien subsequent to the exe-
cution of the mortgage but prior to [232 S.C. 373] its record, as well as to
purchasers without notice who had acquired title after the mortgage was ex-
ecuted but before it was recorded. See also the recent case of Goodwin v.
Harrison, 231 S.C. 243, 98 S.E.2d 255.

Appellant also takes the position that, inasmuch as the two mortgages
were executed on the same date, the transactions are to be construed as hav-
ing transpired simultaneously, in that the term 'date' embraces the whole
day and fractions thereof are not considered in computation of time, 52
Am.Jur. 338. An exception to this rule, however, arises when it becomes
necessary to determine the rights of rival lien claimants. Carroll v. Cash
Mills, 125 S.C. 332, 118 S.E. 290; 33 Am.Jur. 437; 52 Am.Jur. 341; Ex parte
Stagg, 1 Nott & McC., 405, 10 S.C.L. 405. Here, in order to establish priority
of its mortgage over that of Appellant it was necessary that Respondent
show that it had become a lien creditor subsequent to, and without notice of,
Appellant's mortgage transaction, as well as prior to the recording of Appel-
lant's mortgage. The case is thus within the exception before mentioned.

For the foregoing reasons, we are of opinion that the mortgage of the
Bank of Greenwood has priority over the mortgage held by the South Car-
olina National Bank of Greenville; that all exceptions should be dismissed
and the Order appealed from affirmed; and It Is So Ordered. Affirmed.

STUKES, C. J., and OXNER, LEGGE and MOSS, JJ., concur.

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